Lack of Transparency in Company Ownership and Financial Information in Marshall Islands

The Marshall Islands has been found to lack official records of company ownership, making it challenging to track beneficial ownership and monitor potential money laundering and tax evasion activities.

Poor Corporate Transparency Regulation

The jurisdiction scored poorly on key aspects of corporate transparency regulation, including public company ownership and accounts. Companies are not required to disclose their ownership structures or make their financial statements publicly available.

Inadequate Tax Administration

The Marshall Islands has been found to lack efficiency in its tax administration, using inadequate tools to analyze tax-related information and failing to establish a large taxpayer unit. Additionally, it does not grant unilateral tax credits for foreign tax payments, which can promote tax evasion.

Permissive Environment for Concealing Beneficial Ownership

• Cell companies and trusts with flee clauses are allowed, making it easier to conceal beneficial ownership.
• The jurisdiction lacks international cooperation on financial information exchange, making it harder to track cross-border transactions.

Key Findings

• The Marshall Islands does not maintain official records of company ownership.
• Companies are not required to disclose their ownership structures or make their financial statements publicly available.
• The jurisdiction lacks efficiency in its tax administration, using inadequate tools to analyze tax-related information.
• It does not grant unilateral tax credits for foreign tax payments, which can promote tax evasion.
• Cell companies and trusts with flee clauses are allowed.

Recommendations

To increase transparency and cooperation on financial information, the Marshall Islands should:

• Establish a public register of company ownership and make financial statements publicly available.
• Improve its tax administration by implementing adequate tools for analyzing tax-related information and establishing a large taxpayer unit.
• Consider granting unilateral tax credits for foreign tax payments to prevent promoting tax evasion.
• Restrict or prohibit the use of cell companies and trusts with flee clauses.

By implementing these recommendations, the Marshall Islands can increase transparency and cooperation on financial information, making it more difficult for individuals and companies to hide their assets and evade taxes.