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Marshalls Islands’ Financial Record-Keping Requirements Raise Concerns Amid Low Tax Rates and Ease of Company Formation
The Republic of the Marshall Islands, a small island nation in the Pacific Ocean, has long been known for its low tax rates and ease of company formation. However, recent concerns have been raised about the country’s financial record-keeping requirements, which have led to it being listed as a non-cooperative jurisdiction for tax purposes by the European Union.
Financial Record-Keping Requirements
According to the Marshall Islands’ Business Corporations Act, there are no minimum capital requirements for company formation. Additionally, annual financial statements and tax returns are not required to be submitted to the government. However, companies must keep financial records to demonstrate their financial position.
Benefits of Setting Up a Company in the Marshall Islands
One of the key benefits of setting up a company in the Marshall Islands is the low tax rate. Resident companies’ income is taxed at progressive rates, with 3% being applied to income over $10,000. Non-resident companies that do not conduct business in the Marshall Islands are exempt from all taxes, including zero tax on income, profits, dividends, royalties, compensation, and other relevant sources of revenue.
Concerns about Financial Record-Keping Requirements
However, this lack of transparency has raised concerns about the country’s financial record-keeping requirements. The European Union has listed the Marshall Islands as a non-cooperative jurisdiction for tax purposes, which may limit banking options and require lengthy and complicated due diligence processes.
Company Formation Requirements
The Business Corporations Act also sets out specific requirements for company formation, including:
- Filing articles of incorporation with the Registrar or Deputy Registrar of Corporations
- Ensuring that the board has at least one director
However, it is unclear whether these requirements are sufficient to ensure transparency and accountability in the country’s financial system.
Conclusion
Despite these concerns, the Marshall Islands remains a popular choice for investors and entrepreneurs seeking to take advantage of its low tax rates and ease of company formation. With proper planning and a holistic approach, it may be possible to navigate the complexities of setting up a company in the Marshall Islands. However, it is essential to carefully consider the potential risks and challenges associated with operating in this jurisdiction.
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For more information on setting up a company in the Marshall Islands or other low-tax jurisdictions, contact us today. Our team of experts can help you determine whether this option is right for your business needs.