Marshall IslandsTax Obligations Detailed

In the Marshall Islands, employers primarily contribute to the Social Security system and withhold employee contributions.

Social Security Contributions

As of March 2017, employers contribute 8% of their employee's gross taxable wages to the Marshall Islands Social Security Administration (MISSA). This matches the employee's contribution rate. The taxable wage base is capped at $10,000 per quarter. This means the maximum social security contribution per employee, per quarter, is $800 for both the employer and employee.

Taxes on Wages and Salaries

The Marshall Islands levies a progressive income tax on wages and salaries. As of 2024, the tax rates are:

• 8% on the first $15,600 of annual income.
• 12% on the next $10,400.
• 16% on any income exceeding $26,000.

An annual exemption of $8,320 applies to individuals earning $8,320 or less per year. This exemption is prorated by pay period ($160 per week or $693.33 per month). Employees with multiple jobs can only claim one exemption.

Corporate Taxes

Non-resident domestic companies incorporated in the Marshall Islands and not conducting business within the country are not subject to corporate income tax.

Please note that tax laws are subject to change. The information provided here is based on the latest available data as of February 5, 2025.

In the Marshall Islands, employee tax deductions primarily involve social security contributions and potentially health insurance premiums, with income tax calculated separately.

Employer Tax Obligations

• Social Security Contributions: Employers contribute 8% of each employee's gross salary up to a quarterly maximum of USD $10,000. The employer withholds an additional 8% from the employee's salary for their contribution, remitting both portions to the Marshall Islands Social Security Administration (MISSA).
• Health Insurance: Some employers offer health insurance and deduct premiums from employee salaries. Details vary based on the specific plan.
• Registration: Employers must register with MISSA and obtain an Employer Identification Number (EIN).

Employee Tax Deductions

• Social Security Contributions: Employees contribute 8% of their gross salary, matching the employer's contribution, up to the same quarterly maximum of USD $10,000. This is withheld directly from their salary.
• Health Insurance Premiums: If offered by the employer, premiums are deducted from the employee's salary.
• Income Tax: Calculated separately and not withheld from salary. The tax rate is 8% on the first USD $8,320 of annual income and 12% on any income exceeding that amount. Those earning below USD $5,200 have an exemption of USD $1,040. Note: An amendment in the Income Tax (Amendment) Act 2025 removed a previously proposed 16% bracket for higher earners.

The Marshall Islands does not have a Value Added Tax (VAT) or Goods and Services Tax (GST). Instead, it primarily relies on import duties and other fees.

Import Duties

The Marshall Islands levies import duties on most goods entering the country. Specific rates vary depending on the product. Certain goods are exempt from import duties, including some personal items, fuel for power generation, and fishing equipment used on licensed vessels. Goods in transit and re-exported goods are also exempt, with refunds available for the latter. No taxes are levied on exports.

Other Taxes and Fees

While there is no corporate income tax, capital gains tax, withholding tax, or VAT/GST for companies operating outside the Marshall Islands, businesses operating within the country are subject to a gross revenue tax. There is also a personal income tax, with rates varying based on income levels. Additionally, an annual company renewal fee applies to maintain good standing. Economic Substance Regulations require annual reporting for certain entities.

The Marshall Islands offers various tax incentives, primarily for investments in specific sectors. These incentives generally involve exemptions from gross revenue tax and import duties.

Tax Incentives

• Gross Revenue Tax Exemption: Businesses investing a minimum of USD 1 million or providing annual wages exceeding USD 150,000 to Marshallese citizens can qualify for a five-year exemption from gross revenue tax. This applies to investments in:

  • Offshore or deep-sea fishing
  • Manufacturing for export (or both export and local use)
  • Agriculture
  • Hotel and resort facilities

• Fish Loining Plant Exemption: A 25-year exemption from gross revenue tax is available for fish loining plants investing at least USD 1 million or paying annual wages over USD 150,000 to Marshallese citizens.

• Import Duty Exemptions: Exemptions from import duties are primarily granted for renewable and alternative energy items.

• Seabed Mining Tax Exemption: Investors in seabed hard mineral mining receive exemptions from all taxes and duties (excluding taxes on wages/salaries, individual income tax, and social security contributions). Instead, they pay the government a share of net proceeds as royalties or a production charge.

International Business Companies (IBCs)

• IBCs are exempt from corporate tax, capital gains tax, and withholding tax on foreign-sourced income.
• No personal income tax is levied on non-residents.
• Simplified reporting and minimal public disclosure apply.
• No stamp duties or exchange controls are imposed.

General Tax Information

The information provided here is based on available sources as of February 5, 2025, and may be subject to change. It's recommended to consult with the Ministry of Finance or a tax advisor for the most up-to-date and specific details regarding tax incentives and regulations in the Marshall Islands. Proposed tax reforms, including replacing the existing import duties and Business Gross Receipts Tax (BGRT) with a broad-based consumption tax (Marshall Islands Consumption Tax or MICT) and a business profits tax (BPT), may also impact future tax obligations.