As an offshore jurisdiction, the Marshall Islands has a mixed reputation, and it is not suitable for every business goal or any company. Still, in certain cases registering an offshore IBC in the Marshall Islands appears beneficial and lucrative.
Confidentiality first: incorporating an IBC in the Marshall Islands and associated benefits
Your decision to register an International Business Company (IBC) in the Marshall Islands comes with important advantages that make it an appealing choice for businesses in search of the right offshore jurisdiction. One of the foremost reasons in its favor is the beneficial tax environment. An IBC in the Marshall Islands is exempt from local taxes, including corporate income, capital gains, withholding tax, stamp duty, and value-added tax. This tax exemption allows such an IBC to retain and distribute its profits with no tax liabilities or interference from the authorities in the Marshall Islands.
Is confidentiality at the top of your priorities list? It is actually another significant benefit of registering an IBC in the Marshall Islands. With no public register of shareholders, directors, officers, or beneficial owners, the jurisdiction ensures a high level of privacy protection. This anonymity is maintained through the use of nominee services or bearer shares. What is more, local IBCs are not required to file annual accounts, tax returns, or financial statements with the authorities, which is another strong point when the matter concerns privacy. The only annual requirement is the submission of an Economic Substance report. In its nature, the latter is a self-declaration of the IBC’s activities and income sources.
Flexibility in the corporate structure is what you will obviously enjoy if you set up an IBC in the Marshall Islands. The incorporation process is simple, with minimum requirements and fees. It allows an IBC to be established online within 24 hours. An IBC in the Marshall Islands may have a single shareholder and director, who can be the same person, with no nationality or residence restrictions. It is authorized to appoint corporate shareholders and directors, as well as other officers like secretaries or treasurers. The ability to issue various types of shares and amend corporate details with ease adds to the flexibility that all IBCs in the Marshall Islands have.
Access to international markets is facilitated by the free trade agreements that the nation has with various countries and regions worldwide, including the United States, the European Union, China, Japan, and the Pacific Islands Forum. These agreements enable IBCs to trade goods and services with the said markets with no tariffs or quotas, thereby enhancing their competitiveness and profitability. At the same time, the use of the US dollar as the official currency provides stability and widespread acceptance in global transactions.
Facing realities: potential hurdles for IBCs in the Marshall Islands
However, despite these advantages, some considerations may make the Marshall Islands jurisdiction less suitable for certain companies. One notable concern is the perception and reputation associated with offshore jurisdictions. Some investors and counterparties may view companies registered there skeptically due to concerns about transparency, regulatory oversight, and compliance with international standards. In theory, this perception could potentially impact business relationships and opportunities.
Accessing banking services may pose challenges for IBCs in the Marshall Islands. Many banks are cautious about dealing with offshore entities due to regulatory scrutiny and compliance requirements, which could hinder the establishment of banking relationships or conducting financial transactions.
Compliance obligations are also an important factor to consider. While the incorporation process is relatively easy to follow, IBCs are still subject to various compliance requirements. In particular, they have to maintain corporate records and file annual reports. Failure to comply with these obligations may result in penalties or legal repercussions, which necessitates careful attention to regulatory requirements.
Business registration options in 2024
In 2024, the jurisdiction comes with a range of options for companies looking to register there. Among these are International Business Companies (IBCs) or Non-Resident Domestic Corporations (NRDCs). These are versatile entities permitted to engage in any lawful business activity, except for banking, insurance, trust, or gaming operations. You may also consider the incorporation of a general partnership formed by two or more individuals to run their business together. Likewise, limited partnerships offer a structure where one or more general partners manage the business and bear personal liability, while limited partners contribute capital with limited liability and no management authority.
In 2024, the new offshore IBC rules in the Marshall Islands allow for the formation of Limited Liability Companies (LLCs). The latter come with a hybrid structure blending characteristics of corporations and partnerships. In the Marshall Islands, LLCs are flexible in choosing their tax treatment, whether as a pass-through or a separate entity. Foreign maritime companies also find a welcoming environment here, particularly those involved in owning or operating vessels registered under the nation’s maritime laws.
However, it is not all gold that glitters. In our case, it means that certain types of companies are restricted from registration in the Marshall Islands in 2024. These include entities engaged in banking or trust business, with exceptions made for Private Trust Companies. Such activities encompass accepting deposits, lending money, managing assets, or providing fiduciary services. Similarly, insurance or reinsurance companies are prohibited from registration, covering activities like underwriting risks, issuing policies, and processing claims.
Two more business types not eligible for registration in the Marshall Islands are those in forex or gaming sectors. This category implies currency trading, gambling or betting services, and the operation of casinos or lotteries. The above restrictions reflect the jurisdiction’s focus on certain industries while maintaining regulatory integrity and adherence to international standards. Hence, if you contemplate registering a company in the Marshall Islands, be prepared to align your activities with the permitted categories to ensure compliance.
Expert assistance for Marshall Islands IBC registration and beyond
For any questions about IBC registration in the Marshall Islands, please message the International Wealth expert team. We also offer other services for Marshall Islands companies, including offshore banking and ship or yacht registration. You are welcome to get in touch with us about any of these issues, regardless of who registered your company.