Non-Resident Domestic Corporation (Company limited by shares)
The Republic of the Marshall Islands (RMI) offers a distinct legal framework for incorporating non-resident domestic business corporations, commonly used as international business vehicles. These entities are governed primarily by the Marshall Islands Business Corporations Act (BCA) and are designed for use outside the territory of the Marshall Islands. As such, they provide a high degree of operational flexibility, subject to certain regulatory boundaries.
Non-resident domestic corporations (NDCs) are legal entities incorporated under the BCA, distinct from Limited Liability Companies (LLCs), which are formed under the Limited Liability Company Act. While both structures offer limited liability, corporations operate through a shareholder and director framework, whereas LLCs follow a member-based structure.
NDCs may conduct any lawful business activity, with two principal exceptions:
- Gaming or gambling operations, including online gaming
- Regulated financial services, such as banking, insurance, virtual asset, or fiduciary/trust services
Additionally, NDCs are restricted from conducting business within the territory of the Marshall Islands or with its residents, whether individuals or entities. However, they are permitted to engage with professionals located in the jurisdiction—such as lawyers, accountants, or company service providers—when such engagement is for legal, administrative, or compliance-related purposes.
The process of incorporating an NDC in the Marshall Islands is relatively straightforward. The corporation is formed by submitting Articles of Incorporation to the Registrar of Corporations. These articles set out essential details such as the company name, authorized share capital, and the nature of the business.
Once incorporated, the company’s internal governance is determined by its bylaws, which outline the rules governing the conduct of meetings, decision-making procedures, share issuance, and other operational matters.
Key structural features include:
- Minimum of one director and one shareholder, who may be the same person
- Shareholders and directors can be natural persons or legal entities, and there are no residency requirements
- No minimum share capital is mandated by law; companies must simply issue at least one share, which can be of any class, par value, or price
- Shares may be denominated in any currency and structured with differing voting and economic rights, subject to the company’s governing documents
The Board of Directors is responsible for managing the corporation’s affairs, including entering into contracts, maintaining corporate records, and executing the company’s business strategy. Directors are elected by the shareholders and may be granted broad authority under the bylaws.
Shareholders, as owners of the company’s equity, typically hold voting rights based on the number and type of shares they possess. They retain the power to appoint or remove directors, approve major corporate actions, and adopt or amend bylaws.
There is no requirement for companies to hold meetings in the Marshall Islands, nor is there a mandate for meetings to be held at all if the governing documents allow for written resolutions or electronic participation.
Non-resident domestic corporations that do not conduct business within the Marshall Islands are exempt from all forms of local taxation, including:
- Corporate income tax
- Capital gains tax
- Withholding tax
- Sales tax or VAT
This exemption applies provided that the entity does not derive income from local sources and adheres to the non-residency status requirements defined under Marshall Islands law.
In line with this exemption, NDCs are not required to file annual tax returns or submit financial statements to the Marshall Islands authorities. Nor is there an obligation to prepare or file an annual report with the Registrar. This regulatory environment reduces administrative burden and enhances operational efficiency for international users.
However, in response to international tax compliance standards—particularly those set by the OECD’s Base Erosion and Profit Shifting (BEPS) initiative and EU substance rules—the Marshall Islands has implemented economic substance regulations.
All NDCs are required to:
Submit an annual economic substance notification, regardless of their business activities
If engaged in a relevant activity (e.g., shipping, fund management, distribution and service. center, headquarters services, or pure equity holding company operations), submit an economic substance return, including details of employees, expenditures, and the nature of the business
While there is no requirement to file financial statements with any government body in the Marshall Islands, all corporations must maintain adequate accounting records.
Accounting records may include ledgers, contracts, invoices, receipts, bank statements, and any other relevant documentation. These records must be retained for at least five years from the date of the relevant transaction.
Companies are permitted to store records outside the Marshall Islands.
Every NDC must appoint a registered agent and maintain a registered office address in the Marshall Islands. The registered agent is responsible for receiving legal notices and ensuring compliance with local regulations, including government filings and fees.
Annual government fees are payable to maintain the corporation’s good standing. These fees cover the ongoing registration of the entity and are typically processed through the registered agent.
Due to their structural flexibility and favorable tax status, Marshall Islands non-resident corporations are frequently used in a variety of international business contexts, including:
- Holding companies for movable assets
- Maritime and shipping operations, particularly for owning and managing vessels
- International trading and consulting services
- Private investment vehicles
- Asset protection and succession planning
The jurisdiction’s long-standing affiliation with maritime commerce also makes it a popular choice for registering ship-owning entities under the Marshall Islands International Ship Registry, one of the largest open registries globally.
Marshall Islands Non-Resident Corporations provide a streamlined and internationally compliant structure for conducting business activities outside of the jurisdiction. With minimal regulatory overhead, no local taxation, and a clear legal framework, they are well-suited for a broad range of non-domestic commercial applications. While the regulatory environment remains business-friendly, it is equally aligned with global standards on transparency, substance, and financial accountability, ensuring long-term viability for international business operators.
Legal
Country code – MH
Legal Basis – Common law
Legal framework – Business Corporations Act (Marshall Islands Associations Law)
Company form – Non-Resident Domestic Business Corporation (Company limited by shares)
Liability - The liability of the shareholders for the company is limited to the amount of their respective unpaid shares.
Economic Substance - Marshall Islands companies that carry out ‘relevant activities’ are required to meet certain substance tests – such as being directed and managed in the Marshall Islands, adequate physical premises, employees and operating expenditures in the Marshall Islands, and conduct their core income-generating activities in the Marshall Islands.
'Relevant activities' include:
- banking i.e. banking business
- insurance i.e. insurer
- finance and leasing i.e. business of providing financing or leasing of assets
- fund management i.e. management of collective investment schemes
- distribution and service center business i.e. reselling goods to affiliated companies or providing services to affiliated companies. Affiliated company is defined as a company which is part of the same group (e.g. parent-subsidiary, sister entity with common parent company, etc).
- headquartering i.e. providing management services to affiliated companies
- intellectual-property business i.e. holding and exploiting IP assets, generating identifiable revenue from such assets. Please note that the provision of services for developing IP assets or holding or using IP assets for ordinary commercial or service business is not considered an intellectual property business. IP businesses are those that generate separate and identifiable revenue from IP assets (e.g. patent licensing).
- shipping i.e. transportation by sea of persons, animals, goods or mail, the renting or chartering of ships for such transportation, management of ship crew, sale of travel tickets, the use, maintenance or rental of containers, including trailers and other vehicles or equipment for the transport of containers, used for the transport of anything by sea
- and pure equity holding company, companies that only own equity interests in other companies, and only earn dividends and capital gains (subject to a limited economic substance test, where the company does not need to be directed and managed in the Marshall Islands, or conduct its core income-generating activities in the Marshall Islands)
Share capital – There is no minimum share capital established, and this can be denominated in any currency or in more than one currency. The minimum paid in and issued capital may be one share
Non-resident companies may have registered shares, bearer shares, preference shares, and redeemable shares, shares with or without par value and shares with or without voting rights. The standard authorized share capital to be subject to the lowest government fees is 500 shares without par value or up to US$50,000 worth of par value stock.
Shareholders – Non-resident companies may be incorporated by one or more shareholders, who can be either natural or legal persons, residents or non-residents, without limitations. Details of shareholders are not available to the public.
Directors – A business corporation must appoint at least 1 director, who may be a natural or legal person, resident or non-resident, without restrictions. Details of directors are not available to the public.
Secretary – A company secretary is required but may be non-resident, and may be a director. Details of the secretary are not available to the public.
Registered Address – A nonresident company shall have a registered address in Marshall Islands, provided by the Trust Company of the Marshall Islands.
General Meeting – Annual general meetings of shareholders are mandatory but can be held anywhere. Meetings can be held by telephone or other electronic means; alternatively, shareholders may vote by proxy. Shareholders may waive such requirement.
Electronic Signature – Permitted.
Re-domiciliation – Inward and outward re-domiciliation is allowed.
Compliance – Non-resident companies should maintain accounting records, which may be held anywhere in the world.
There are no requirement related to filing an annual return, financial statements or tax return with the Marshall Islands authorities. However, an economic substance declaration must be submitted annually.
- Shareholders not disclosed
- Directors not disclosed
- Corporate shareholders permitted
- Corporate directors permitted
- Local director required
- Secretary required
- Local secretary required
- Annual general meetings required
- Redomiciliation permitted
- Electronic signature
- Annual return
- Audited accounts
- Audited accounts exemption
- Exchange controls
- Common law Legal basis
- 1 Minimum shareholders
- 1 Minimum directors
- - Minimum issued capital
- - Minimum paid up capital
- USDAny Capital currency
- Anywhere Location of annual general meeting
- 2018 AEOI
Taxes
Corporate income tax – Non-resident companies incorporated in Marshall Islands are not subject to corporate income tax. All trading income, investment income, capital gains, compensations, rents and royalties, as well as sales of goods or supplies of services are exempted from taxation.
Other taxes – There is no Marshall Islands wages and salaries tax or social security contributions liability for non-resident domestic companies and their employees.
There are no property, wealth and inheritance taxes in Marshall Islands.
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- 0% Offshore Income Tax Rate
- - Corporate Tax Rate
- 0% Capital Gains Tax Rate
- 0% Dividends Received
- 0% Dividends Withholding Tax Rate
- 0% Interests Withholding Tax Rate
- 0% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- 0 Losses carryforward (years)
- 12% Personal Income Tax Rate
- 14 Tax Treaties
Country details
The Republic of the Marshall Islands is an island state located in the Pacific Ocean, in the Micronesia region. The country spreads over 29 atolls of coral, comprising 1,156 islands and islets.
The islands share maritime borders with the Federated States of Micronesia to the west, Wake Island to the north, Kiribati to the southeast and Nauru to the south. The population of the country is about 50,000 people. The capital and the most populated city is Majuro, with about 28,000 inhabitants.
After being under the mandate of the Spanish, the German, the English, the Japanese and being part of the UN’s Trust Territory of the Pacific Islands and under the administration of the United States, the nation gained its independence in 1990 and is one of the youngest states in Oceania.
Its official languages are English and Marshallese. Its official currency is the United States Dollar (USD).
The Marshall Islands government operates under a mixed parliamentary-presidential. Elections are convened every four years under universal suffrage (for all citizens over the age of 18).
Natural resources on the mainland include phosphate deposits as well as copra harvesting. Agricultural production is concentrated in small farms and the most important commercial crops are coconuts, tomatoes, melons, and the bread tree. There is small but intensive agriculture of copra, coconut, sweet potato and banana.
Livestock is restricted (due to the small extent) to the breeding of pigs, poultry, to a lesser extent cattle and goats. Obviously, fishing is very important although the seas are warm and not very prolific.
The industry is mainly that of copra, coconut oil, frozen fish for export, handicrafts. The aid of the United States government is the main pillar of the economy. The small-scale industry is limited to handicrafts, the processing of fish and copra.
Tourism has been emerging in recent years as a major source of income for the islands. The islands have few natural resources and imports far outnumber exports. Despite the relative scarcity of natural resources in their lands, the Marshall Islands have jurisdictional waters that are not well exploited due to the scarcity of capital.
The issue of postage stamps, mainly for philatelic collecting, is also an important source of income for its economy.
In recent years the country has developed a prolific wholesale and retail trade sector in the major urban areas, as well as a growing financial sector including banking and insurance services.