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Marshall Islands

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Limited Liability Company

The Marshall Islands Limited Liability Company (LLC) offers a flexible and adaptable legal structure that combines features of both partnerships and corporations. This hybrid nature makes LLCs well-suited for a broad range of commercial and private purposes, particularly in cross-border and asset-holding contexts.

LLCs in the Marshall Islands are governed by the Limited Liability Company Act, which provides a modern and highly customizable framework. Unlike more rigid corporate structures, the LLC Act permits extensive contractual freedom, allowing the members of the company to define how it is governed through a private agreement—referred to as the LLC Agreement.

A Marshall Islands LLC possesses separate legal personality, meaning it exists independently of its owners (the members), and it can own assets, enter into contracts, and be party to legal proceedings in its own name.

From a liability perspective, members of an LLC benefit from limited liability. This means that each member’s financial exposure is confined to the amount of their unpaid capital contribution (if any). Members are not personally liable for the debts or obligations of the company, making the LLC a preferred structure for those seeking asset protection and liability containment.

The LLC combines characteristics of corporations and partnerships. Like a company limited by shares, it has independent legal status and offers limited liability. However, akin to a partnership, its internal structure and the relationship among members are governed by contract—specifically, the LLC Agreement—rather than by statutory default rules.

This contractual approach to governance is a distinguishing feature. The LLC Agreement outlines the terms of membership, voting rights, capital contributions, management structure, and profit allocation. It serves as the definitive document regulating the affairs of the company and the obligations and entitlements of its members.

The Marshall Islands LLC Act offers broad flexibility in this regard, placing relatively few mandatory constraints on how the LLC must be operated. Members are given significant discretion to tailor the company’s structure according to their specific commercial objectives or private arrangements.

Ownership in a Marshall Islands LLC is represented by membership interests rather than shares. These interests can be divided into classes, with differing economic rights, voting powers, or governance roles, as determined by the LLC Agreement.

The law imposes no requirement for a minimum or maximum capital contribution, and there is no mandated par value for membership interests. Contributions may take the form of cash, property, or services, and can be adjusted as needed under the terms of the agreement.

Membership can consist of one or more individuals or legal entities, and there is no requirement for members or managers to be residents of the Marshall Islands. This makes LLCs suitable for international structuring.

Marshall Islands LLCs can be member-managed or manager-managed, depending on the governance model chosen by the members and set out in the LLC Agreement.

  • In member-managed LLCs, each member typically has authority to act on behalf of the company and participate in decision-making.
  • In manager-managed LLCs, the members appoint one or more managers (who may be individuals or entities) to run the day-to-day operations, akin to a board of directors in a corporation.

A board of managers may also be established, offering a governance model that resembles corporate boards while retaining the contractual flexibility of an LLC.

One of the distinctive elements of the Marshall Islands LLC regime is the ability for the LLC Agreement to limit or even eliminate the fiduciary duties of managers. This stands in contrast to the directors of companies limited by shares, who are subject to statutory fiduciary obligations toward the company. The ability to contractually define or modify fiduciary obligations provides a high degree of freedom in designing the governance model and allocating risk.

The LLC structure allows for nuanced management of members’ economic entitlements. Capital accounts, distributions, and allocations of profits and losses can be varied among different classes of members and do not need to correspond to voting rights or initial contributions.

This flexibility often proves advantageous in joint ventures, investment funds, and private asset-holding structures, where the economic interests of members may differ in terms of return profiles or priority in distributions.

The LLC Agreement may impose transfer restrictions on membership interests. These provisions are often used to ensure continuity of ownership, prevent dilution of control, or comply with regulatory obligations. Transfer rights can be entirely prohibited, subject to member approval, or conditioned on third-party consents.

Succession and dissolution mechanisms may also be defined in advance. For instance, provisions may stipulate how the company is to be wound up or transferred in the event of a member’s death, incapacity, or voluntary withdrawal. These contractual tools are often utilized in estate planning, family asset management, and trust-like arrangements.

A Marshall Islands LLC that does not conduct business in the Marshall Islands is generally considered non-resident for tax purposes and is exempt from all local taxes, including corporate income tax, capital gains tax, and withholding taxes. However, the company must:

  • Maintain a registered agent and office in the Marshall Islands
  • Pay the annual government renewal fees
  • Submit an economic substance notification to confirm whether the company engages in any relevant activities

If the LLC is involved in activities covered under the Economic Substance Regulations—such as holding companies, shipping, or fund management—it may be required to submit a substance return, demonstrating adequate operational presence in terms of employees, expenditure, and local activity.

There is no requirement to file financial statements or tax returns in the Marshall Islands, provided the company does not carry out local business. However, LLCs must maintain accounting records that sufficiently document the company’s financial activities and allow for the determination of its financial position at any time.

The Marshall Islands LLC offers a modern, flexible, and contract-driven framework that supports a wide variety of business and personal structuring objectives. By combining limited liability and separate legal status with the contractual freedom typical of partnerships, LLCs serve as versatile tools for international investors, asset managers, and private clients alike. Their unique features—particularly the governance flexibility, economic structuring options, and light reporting requirements—make them an attractive option in the context of offshore planning and cross-border operations.

Taxes

Corporate income tax – A Marshall Islands nonresident domestic LLC is not subject to taxes in the Marshall Islands.

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.

  • Tax transparent entity
  • 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)
  • 7% Social Security Employee
  • 7% Social Security Employer
  • 12% Personal Income Tax Rate
  • 4% VAT Rate
  • 14 Tax Treaties

Country details

Marshall Islands
USD
Majuro
Oceania
mh, en-MH
65,859

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.

Tax treaties

Country Type Date Signed
Faroe Islands TIEA 2010-09-28
Iceland TIEA 2010-09-28
Greenland TIEA 2010-09-28
Netherlands TIEA 2010-05-14
Norway TIEA 2010-09-28
New Zealand TIEA 2010-08-04
Korea, Republic of TIEA 2011-05-31
Australia TIEA 2010-05-12
United States TIEA 1991-03-14
Finland TIEA 2010-09-28
United Kingdom TIEA 2012-03-20
Sweden TIEA 2010-09-28
Ireland TIEA 2010-09-02
Denmark TIEA 2010-09-28

Tax treaties Map

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