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Marshall Islands

 
   

Executive Summary
The Republic of the Marshall Islands consists of smaller islands located in the Pacific Ocean, to the North of the Equator.  Its population counts approximately 62,000 inhabitants. Nauru, Kiribati and Federated States of Micronesia are its neighbour countries. Majuro (Delap) is the capital of the Marshall Islands, which cover a total area of 181 sq km. The country gained its independence from the US in 1986, and is now a democratic presidential republic.

English and Marshallese are official languages of the Marshall Islands. In the past decade the economy of Marshall Islands has not experienced stable growth, the country has been defined as the “best performer” for ease and low costs in employing and firing employees, at the same time giving a poor evaluation for its investor protection schemes and contract enforcement. Foreign investments as well as tourism have been declining sectors over the past years. Agriculture is based on smaller size farms. Coconuts, tomatoes and melons are the most important agricultural products used for commercial purposes. Fish processing and handicrafts are the only industries of the country. Energy costs are extremely high within the Marshall Islands.

The US provide economic support to the Marshall Islands, as well as hold there a missile defense test site, for which the land owners are paid rent fees. Among other countries that grant aid to the Marshall Islands it is necessary to note the following countries: Taiwan, Japan, Australia and the EU.

The US Dollar is the currency used on the territory of the Marshall Islands.

Geography
29 atolls and 5 separate islands constitute the Marshall Islands. A major part of the islands’ land territory is at the sea level.

The climate of the Marshall Islands is humid and hot. Rain seasons last from May to November, but sometimes prolonged drought periods occur as well. The country periodically suffers from typhoons.

Map, Flag and Coat of Arm


Types of Company

There is no requirement for companies registered in the Marshall Islands to file annual returns; there is no public register within the jurisdiction which would contain names of directors and shareholders.

Corporation
It takes 1-2 days to incorporate a non-resident domestic corporation in the Marshall Islands. Registered agents of the jurisdiction may start a company’s registration procedure online. Such a company may be structured according to a US model with a company president, secretary and treasurer, or following a UK example by assigning roles of managing director and corporate secretary. There are no requirements for a minimum number of such a company’s directors or shareholders.

Specific provisions are outlined in order to realize a redomiciliation to and from the Marshall Islands. In addition, foreign companies may merge with local corporate entities (corporations and LLCs).

General Partnership
In order to form a partnership a Certificate of Partnership Existence should include the following information – name of the partnership, name and address of its registered agent, any other matter a partnership needs to state. The liability of every partner is unlimited.

Limited Partnership
At least one general and a minimum of one limited partner can form a limited partnership. Limited partners are liable to the partnership’s obligation up to the amount of capital invested. A Certificate of Limited Partnership must be filed, in order to register a limited partnership.

Limited Liability Company (LLC)
This type of company unties benefits of a corporation and a partnership. Members sign an operating contract and have a limited liability. Unlike the requirements of a limited partnership, all members of an LLC may have a limited liability to the company’s obligations and debts. Such a company must have a local registered agent. Names of this company’s members are not disclosed in the corporate documents, thus providing a high level of confidentiality.

Foreign Maritime Entity
The Marshall Islands are one of the world’s leading and most popular jurisdictions for the purposes of owning and operating vessels. In order to register a foreign company as a maritime entity in the Marshall Islands, it is necessary to supply the name of the entity, its type, jurisdiction where it has been created, date of incorporation, documents that confirm that a company may own and operate a vessel and other relevant information. All the documents in a foreign language must be translated to English and certified by a notary.

Taxation

Personal

No income taxes and no social security contributions are payable by shareholders, directors or employees of non-resident domestic corporations.

However, personal income taxes are levied on all the persons employed in the Marshall Islands. The income tax rate is 8% for the first USD 10,400 and 12% for the rest of income. The tax is payable on a monthly basis. Employers and employees of resident companies are liable to pay social security contributions on a quarterly basis.

Corporate
Non-resident domestic companies are exempt from all forms of taxes in the Marshall Islands, meaning that all foreign-owned types of companies are exempt from taxes if they do not conduct any activity on the territory of the Marshall Islands.

Corporate tax for local companies is levied at a rate of 11.5%. Sales tax rate varies from 2% to 4%. No property taxes exist in the Marshall Islands. Some products have a duty free access to the US market.

 
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