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The Marshall Islands has produced an appealing legislative framework for offshore companies and entities incorporated and registered in the Islands. This framework is embedded in the Marshall Islands Associations Law which contains Acts governing all Marshall Islands offshore companies. These Acts are: the Business Corporations Act, Limited Partnership Act, Revised Partnership Act and the Limited Liability Company Act. The Associations Law contains general rules for all Marshall Islands business companies, whilst specific clauses are given in the respective Acts for each type of Marshall Island Entity.
Marshall Islands has a fiscal regime under which taxes are applied based on residency in terms of source of income. Hence, unlike some offshore jurisdictions where company tax residency is assessed based on where a company is controlled and managed, in the Marshall Islands source of income is the determining factor. Consequently, what is found is a situation where offshore companies are referred to as non-resident domestic corporations, and a comprehensive legislation to support this framework. In the same vein, foreign companies (incorporated in a foreign jurisdiction) can also be resident or non-resident for tax purposes depending on whether they trade or offer services in or outside the Marshall Islands.
Marshall Islands corporate structures (e.g. Offshore partnership versus domestic partnership) whether offshore or onshore are thus very much the same in terms of structure and powers, with the exception that offshore companies are tax exempt and restricted from trading within the Marshall Islands. Offshore enterprise construction, similar to Belize companies registration, must also be done through the Trust Company (designated registered agent for Marshall Islands offshore companies and entities). Marshall Islands offshore companies and entities are subject to annual fees, but enjoy exemption from exchange controls, stamp duty, royalties, corporate tax, income tax, dividends, interests, estate and inheritance tax.
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