4. Why Do Companies Incorporate in the Marshall Islands?
Marshall Islands is a perfect business location for companies seeking efficient, low-cost, and highly recognized incorporation. Its advantages include tax incentives, strong privacy, flexible legal forms, and simplicity of incorporation, and thus, it is especially suitable for shipping, trading, and investment companies.
One of the most attractive is the zero-tax policy. Business entities incorporated in the Marshall Islands are exempted from corporate tax on income, capital gains tax, and withholding tax, subject to the condition that the income is earned outside the jurisdiction. However, the country complies with international standards such as FATF and OECD, offering a balance between tax efficiency and transparency of finances.
The legal regime is based on Delaware corporate law, which investors are familiar with all over the world. There is a minimum of one shareholder and one director for a company, and no nationality or residency requirements. It is not mandated by law that meetings be conducted in the country every year.
The incorporation process is quick and simple and is usually completed within one to two business days. There is no minimum capital requirement, and the company can issue more than one class of shares, and is thus appropriate for investment vehicles or asset holding.
High confidentiality is also a key benefit. There is no public register of directors or shareholders for the Marshall Islands. Information is maintained in private hands by the registered agent, with maximum privacy still being in full compliance with international reporting requirements if and when needed.
The jurisdiction is also popular with shipping companies since it has one of the biggest ship registries in the world. Companies can incorporate and register vessels under the same laws, which simplifies management and compliance.
No foreign exchange controls also exist, allowing for free cross-border movement of capital and profits, which is vital for international operation.
Finally, the maintenance and incorporation expense is highly competitive compared to other places like the Cayman Islands or BVI. This makes the Marshall Islands a useful choice for holding companies, medium-sized or small businesses, as well as for asset protection arrangements.
In short, companies choose to incorporate in the Marshall Islands for its tax neutrality advantage, law simplicity, strong confidentiality, low cost, and international acceptability, in a jurisdictional environment enjoying international compliance standards at large.