A sovereign state in free association with the United States (Compact of Free Association).
The Marshall Islands taxes resident companies (those conducting business within the Marshall Islands) on a simple progressive schedule (0.8% on the first USD 10,000 of income, 3% above that), while non-resident domestic entities (the standard International Business Company / IBC structure, incorporated under Marshall Islands law but not conducting business locally) are exempt from corporate income tax, withholding tax, and capital gains tax entirely on income earned outside the Marshall Islands. The Marshall Islands is a sovereign state in free association with the United States under the Compact of Free Association.
A specific statutory corporate tax year-end and filing deadline is not confirmed in available primary sources for resident companies; non-resident domestic entities generally face minimal annual reporting requirements and no obligation to file financial statements or tax returns.
Progressive for resident companies: 0.8% on the first USD 10,000 of income, 3% above that; non-resident companies not conducting business within the Marshall Islands are exempt from corporate income tax entirely, making it a popular offshore incorporation jurisdiction.
The Marshall Islands does tax wages and salaries, via the Wages and Salaries Tax (WST) under the Income Tax Act 1989 (48 MIRC Ch.1), most recently amended by Nitijela Bill No. 103 / P.L. 2026-68 (passed March 16, 2026). The current structure is progressive: 8% on the first USD 10,400 of annual wages (prorated to roughly USD 200/week or USD 867/month), stepping up to 12% on wages above that threshold. A separate, lower 5% rate applies specifically to US contractor personnel wages and salaries. The tax is withheld by the employer and remitted to the Secretary of Finance/Revenue and Taxation. The commonly repeated claim on offshore-company-formation marketing sites that the Marshall Islands has "0% personal income tax" refers only to the entity-level exemption for non-resident domestic entities (IBCs not conducting business locally) - it does not describe the separate wage tax that applies to actual employees and residents, and should not be read as a statement about personal income tax generally.
0% - no VAT.
A company is a Marshall Islands "resident" for tax purposes if it conducts business within the Marshall Islands; non-resident domestic entities (the standard offshore/IBC structure) are those incorporated under Marshall Islands law but not conducting business there, and are taxed only if they earn Marshall Islands-source income. Marshall Islands entities are also subject to economic substance requirements intended to ensure taxation occurs where genuine business activity takes place, waivable on proof of tax residency elsewhere. No individual day-count residency test is confirmed against Marshall Islands legislation (one lower-quality source references a 183-day US-resident-linked threshold, but this is not independently verified).
A foreign entity that conducts business within the Marshall Islands, whether through a fixed place of business or otherwise, is treated as a resident company for tax purposes and taxed on that basis under the progressive 0.8%/3% schedule; an entity incorporated under Marshall Islands law that does not conduct business there (a non-resident domestic entity) remains untaxed on foreign-source income regardless of its Marshall Islands incorporation. Marshall Islands entities are also subject to economic substance requirements intended to ensure taxation occurs where genuine business activity takes place, waivable on proof of tax residency elsewhere.
The Marshall Islands has no Controlled Foreign Company regime.
No thin capitalization rule exists. Non-resident domestic entities (the standard International Business Company structure) are statutorily exempt from corporate tax, income tax, and withholding tax in their entirety - there is no domestic taxable income base against which an interest-deduction limitation could operate. Resident companies conducting business within the Marshall Islands are instead subject to a separate, simple domestic tax (a flat USD 80 on the first USD 10,000 of income plus 3% on the excess); no thin capitalization provision applies to this domestic regime either, per available sources.
The Marshall Islands classifies entities under its own domestic Business Corporations Act and Income Tax Act rather than offering an elective check-the-box system, and no ATAD2-style anti-hybrid mismatch regime addressing double-deduction or deduction-without-inclusion outcomes has been identified, consistent with the Marshall Islands having no CFC regime of its own. Marshall Islands IBCs and LLCs are commonly used in cross-border structuring as disregarded or pass-through entities under a foreign owner's home-country check-the-box election, a classification choice made under the foreign owner's own law rather than under Marshall Islands law; the owner's home-country CFC rules (where they exist) remain the operative anti-avoidance mechanism from the owner's perspective.
No domestic FBAR-equivalent regime requires Marshall Islands residents to separately disclose foreign financial accounts. The Marshall Islands is a CRS participating jurisdiction, having signed the CRS Multilateral Competent Authority Agreement in October 2015 with automatic exchange beginning in September 2018. US persons remain independently subject to FinCEN Form 114 (FBAR) and potentially Form 8938 regardless of the Marshall Islands' own rules.
No participation exemption regime for dividends or capital gains from a qualifying subsidiary was identified, consistent with the Marshall Islands' broader zero-tax treatment of non-resident domestic entities' foreign-source income; there is no distinct minimum-ownership exemption mechanism because most qualifying income is already outside the tax base entirely under the entity-level exemption described above.
A dedicated unilateral foreign tax credit provision is not confirmed in available primary sources for resident companies subject to the domestic 0.8%/3% tax; given the Marshall Islands' lack of comprehensive double tax agreements, relief from double taxation should not be assumed available beyond the Marshall Islands' narrower network of Tax Information Exchange Agreements, which provide for information sharing rather than double-tax relief.
The Marshall Islands has no comprehensive double tax agreements. Its international tax-cooperation network consists of 13 Tax Information Exchange Agreements (TIEAs) - narrower information-sharing instruments, not treaties that provide double-tax relief - with Australia, Denmark, the Faroe Islands, Finland, Greenland, Iceland, Ireland, Korea, the Netherlands, New Zealand, Norway, Sweden, and the United States, per GSL's specialist tax-law profile of the jurisdiction. The Marshall Islands has not signed the OECD's Multilateral Convention (MLI). A separate, lower-quality company-formation source's vague reference to "14 Tax Treaties" (with no named partners or supporting detail) does not hold up against GSL's specific, named, and independently checkable list, and is not relied on here.