Marshall Islands Offshore Company Registration: Benefits, Requirements and Steps

Key Takeaways

• Marshall Islands companies are regulated by legislation modelled on Delaware law, offering a familiar and robust legal framework for international investors.
• The Republic of the Marshall Islands does not levy taxes on income earned abroad by foreign companies registered within the jurisdiction.
• Marshall Islands company formation is generally known as a low-cost and efficient process to form an offshore entity.

Overview of the Marshall Islands as an Offshore Jurisdiction

The Republic of the Marshall Islands (RMI) is an internationally recognised jurisdiction in the northwestern Pacific operating under a Compact of Free Association with the United States.

With a well-developed legal framework influenced by the Delaware legal tradition and the US dollar as its official currency, the Marshall Islands offers strong legal benefits and favourable tax treatment for international investors. The RMI Corporate Registry provides for a straightforward registration process for forming various types of offshore entities, including the International Business Companies (IBCs), LLCs, and partnerships.

Who Should Use an RMI Offshore Company

Known as a tax-efficient jurisdiction with no public register of beneficial owners, the Marshall Islands is a destination of choice for many global companies and entrepreneurs. Offshore investment vehicles, holding structures, and ship-owning companies often choose the RMI International Business Company (IBC) for company formation, while many private entrepreneurs prefer the Marshall Islands LLC.

The benefits offered by the RMI jurisdiction, including strong privacy and asset protection, exemption of tax on foreign income, and its strong reputation in the shipping, maritime and international trade industry, make it a popular destination for offshore company formation.

Who Should Not Register a Marshall Islands Company

While the RMI offers multiple advantages to business owners, this jurisdiction may not be optimal for all types of businesses. For example, a Marshall Islands offshore entity may not be suitable for companies trading primarily within a single domestic market or for businesses requiring extensive local banking options and physical offices.

Entrepreneurs seeking access to double taxation treaties or operating in industries subject to strict regulatory licensing may also find the Marshall Islands limiting. For these cases, jurisdictions such as Hong Kong, Singapore, the UAE, or the UK may be more appropriate.

What Are the Main Advantages of Forming a Company in the Marshall Islands?

Privacy and Confidentiality

The Marshall Islands does not have a public register of ultimate beneficial owners. The information about IBC shareholders, LLC members, and company directors is shared at the moment of RMI company registration with the registered agent and is generally not accessible to the public.

Tax Exemption on Foreign Income

Offshore companies in the Marshall Islands are exempt from taxes on foreign income as well as from withholding and corporate taxes. The absence of taxation of revenue earned abroad makes the RMI highly attractive to international businesses and entrepreneurs.

Operational Flexibility

The Marshall Islands allows shareholders and members to operate their companies from abroad without holding meetings locally. The RMI legislation for international business companies and LLCs does not have a requirement for a local director or shareholder, providing additional flexibility for international structures. The jurisdiction has efficient and digitised reporting processes, including electronic filing of the report on economic substance.

Asset Protection

The legislation governing Marshall Islands companies is aligned with U.S. law, offering strong asset protection for both International Business Companies and LLCs. Specifically, the Marshall Islands allows LLCs to create a Series LLC that can create multiple internal divisions with separate assets and liabilities, which further reduces risk exposure.

 

What Are the Drawbacks of Offshore Companies in the Marshall Islands

While the Marshall Islands offers strong benefits to companies that seek to start an offshore entity, forming a company within the jurisdiction imposes certain requirements on the owners.

The jurisdiction has aligned its regulations with OECD guidelines that impose economic substance requirements and require relevant international businesses to demonstrate local presence. Also, while the RMI does not have a public register of UBOs,  the information on beneficial owners is disclosed to the registered agent and can be accessed by authorities in relevant cases. Finally, opening a bank account in the Marshall Islands requires KYC and providing full documentation on the beneficial owners and source of funds.

 

Marshall Islands vs Other Offshore Jurisdictions

The Marshall Islands is often compared with other offshore jurisdictions sought for their tax benefits and increased privacy and asset protection, which typically include:

Jurisdiction	No foreign income tax	No public register for beneficial owners	Charging order limitations for an LLC
Bahamas	✓	✓	✗
BVI	✓	✓	✗
Belize	✓	✓	✓
Marshall Islands	✓	✓	✗
Nevis	✓	✓	✓
Panama	✓	✓	✗
Seychelles	✓	✓	✗

 

Choosing Your Company Structure: Marshall Islands International Business Company vs LLC

While the Marshall Islands allows registering multiple types of legal entities, the most popular ones for offshore company formation are the International Business Company and the LLC.

Marshall Islands IBC

The Marshall Islands International Business Company (IBC) is a legal entity governed by the Business Corporations Act and modelled after Delaware corporate law. Known as a low-cost and easy-to-administer corporate entity, Marshall Islands IBCs are widely used for holding assets, international trade, as well as SPVs for cross-border transactions.

Marshall Islands LLC

Regulated by the Limited Liability Company Act, the Marshall Islands LLC combines the operational flexibility of a partnership and the liability protection of a corporation. An LLC can be managed either by members or appointed managers while shielding the members from the liabilities incurred by the company. Marshall Islands LLCs are popular legal entities for holding assets, e-commerce, and owning and operating private yachts and commercial vessels.

What Are the Minimum Requirements for Company Registration in the Marshall Islands

The process of Marshall Islands company formation is known for its ease of registration, comparatively low costs, and minimal requirements. An IBC should have a minimum of one shareholder, while an LLC should have at least one member, and each should have a minimum of one director. There is no requirement for a local director, and the registration can be completed remotely without visiting the islands through a local registered agent.

How to Register a Marshall Islands Offshore Company: A Step-By-Step Guide

Step 1: Selecting a Company Name

When registering a Marshall Islands company, the first step is to choose a unique name for your legal entity. The name should not be used by another entity registered with the jurisdiction and include a proper ending such as International Business Company, IBC, Corporation, Corp., Incorporated, Inc., or Limited Liability Company, LLC, Limited, or Ltd as appropriate to each type of entity.

Step 2: Selecting a Licensed Registered Agent

Both the Marshall Islands IBC and LLC must have a local registered agent licensed within the jurisdiction. The registered agent keeps company records and serves as a point of contact for all official correspondence.

Step 3: Completing Due Diligence (KYC)

When you choose a local registered agent for forming an IBC or LLC, you need to provide them with a copy of your passport, proof of address, and an explanation of the source of your funds. The registered agent will conduct due diligence before filing for registration and will maintain your records.

Step 4: Filing Registration Documents

At the final step, the agent will submit the Articles of Incorporation for IBC or Articles of Organisation for your LLC to the RMI Corporate Registry. At this stage, the registration fees should be paid. Once the application is approved, a Certificate of Incorporation for an IBC or Certificate of Formation for an LLC will be issued, completing the registration process.

How Long Does Marshall Islands Company Formation Take?

Most Marshall Islands companies can be incorporated within 24-72 hours after submission of all required documents. A typical timeline for registering a business in the RMI includes:

Name approval	same day
KYC review	1-3 days
Filing documents	1 day
Certificate issuance	1-2 days

 

Economic Substance Requirements in the Republic of Marshall Islands

The Marshall Islands introduced its Economic Substance Regulations (ESR) in 2018. The ESR require non-resident domestic entities performing certain activities, such as banking, insurance, or fund management, to demonstrate local presence.

At the same time, all Non-Resident Domestic Entities and Foreign Maritime entities in the Marshall Islands are required to file an annual report on economic substance. In the RMI, entities can file their economic substance report electronically through the ESR reporting portal and receive an electronic certificate upon completed submission.

How Marshall Islands Offshore Companies Are Taxed

The Marshall Islands is a tax-neutral jurisdiction for foreign entities which does not levy the income tax, corporate gains tax, or withholding tax on foreign-source income. In addition to no income taxes, the RMI does not apply estate taxes, inheritance taxes or stamp duties. At the same time, shareholders in international business companies and members of LLCs registered in the Marshall Islands can generally have tax liabilities in their home jurisdictions.

Can a Marshall Islands Company Open a Bank Account?

In practice, most Marshall Islands offshore companies maintain bank accounts outside the jurisdiction, as non-resident entities are not required to open accounts onshore in the RMI. Popular options for opening an international bank account include Singapore, Switzerland, or other jurisdictions, depending on the nature of the business.

Currently, there are only a few commercial banks in the Marshall Islands. Those businesses that are interested in opening a bank account locally are required to follow the KYC process, including providing copies of passports for shareholders or members, recent proof of address, proof of source of funds, corporate documentation, and a detailed business plan.

What Are the Costs of Registering and Maintaining a Marshall Islands Company?

The cost of Marshall Islands offshore company registration depends on the type of legal entity, whether an IBC or an LLC, and the amount of work required. Generally, the Marshall Islands is considered a low-cost jurisdiction with the initial cost of registration ranging between $1,000 and $2,000.

The average annual maintenance fees for RMI businesses include the registered agent’s renewal fees and government fees. Timely payments of annual maintenance fees are essential to keep the company in good standing and keep it on the RMI Corporate Registry.

Conclusion

A Marshall Islands IBC or LLC is a cost-effective offshore entity that generally pays no taxes on its foreign income. The jurisdiction is aligned with global standards and has a close resemblance to Delaware business law. If you are interested in additional information or assistance in registering a Marshall Islands company, please don’t hesitate to contact the Astra Trust team for additional consultation and personalised service.