In the Marshall Islands, the primary tax contribution for employers is to the Social Security system, as there are no separate employer payroll taxes.

Social Security Contributions

Employers are required to contribute 8% of their employee's gross salary to the Marshall Islands Social Security Administration (MISSA). Contributions are calculated on actual earnings up to a maximum of USD $10,000 per quarter.

Employers are responsible for withholding the employee's 8% contribution from their salary and remitting both the employer's and employee's contributions to MISSA by the required deadline.

Registration

All employers operating in the Marshall Islands must register with MISSA and obtain an Employer Identification Number (EIN). This is a crucial step in ensuring that all tax responsibilities are met.

In the Marshall Islands, the primary and often only deduction from an employee's salary is their contribution to the Social Security system.

Social Security Contributions

Employees are required to contribute 8% of their gross salary to the Marshall Islands Social Security Administration (MISSA). Contributions are calculated on actual earnings up to a maximum of USD $10,000 per quarter.

Other Potential Deductions

In some cases, employers might offer health insurance plans and deduct the premiums from their employees' salaries. The specifics of these deductions depend on the individual employer's health plan provisions.

Important Notes

It's worth noting that the Marshall Islands does not have an income tax for individuals.

In the Marshall Islands, there is no Value-Added Tax (VAT). Instead, a Gross Receipts Tax (GRT) is in place, which operates somewhat differently.

Gross Receipts Tax (GRT) on Services

The GRT is a tax imposed on businesses based on their gross revenue, including revenue from services. The GRT rate varies depending on the type of business activity, with rates ranging from 3% to 8%. Businesses may pass on GRT costs to customers by incorporating them into service prices.

Important Considerations

While GRT shares similarities with VAT, the mechanics differ. VAT is generally applied at each stage of the supply chain, with businesses being able to claim back VAT paid on inputs. GRT applies directly to the final business revenue.

If providing services from the Marshall Islands, it's crucial to understand the GRT implications and the required registration and filing procedures. For specific questions on how the GRT applies to your business or service, it's advisable to consult with a tax professional specializing in Marshall Islands taxation.

The Marshall Islands offers an attractive tax regime for businesses, with a 0% corporate income tax. This significant advantage is further enhanced by limited tax requirements, as there are no obligations to file corporate tax returns for non-resident companies.

Specific Incentives

Businesses that invest a minimum of USD $1 million and employ Marshall Islands citizens with salaries exceeding USD $150,000 annually may negotiate tax incentives with the government.

Companies engaged in deep seabed mining activities within the Marshall Islands economic zone are exempt from taxes, with the exception of taxes on wages, individual income tax, and social security contributions. However, a royalty, production charge, and share of net proceeds are still payable to the government.

Other Considerations

The scope of tax incentives may be customizable based on negotiations with the Marshall Islands government as part of larger investment projects.

While corporate income tax might be exempt, companies still need to consider these costs when setting up and operating in the Marshall Islands:

• Registration fees
• Trust administration fees
• Work permit fees
• Social security contributions