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ARTICLE · 22 JULY 2020

Marshall Islands | Economic Substance Regulations

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The Marshall Islands has adopted the Economic Substance Regulations ("ESRs") in relation to the compliance of legal entities which are tax residents or centrally managed and controlled in the Republic of Marshall Islands.

CyprusTax
Margarita Sofokleous
Margarita Sofokleous
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The Marshall Islands has adopted the Economic Substance Regulations ("ESRs") in relation to the compliance of legal entities which are tax residents or centrally managed and controlled in the Republic of Marshall Islands in order to ensure that profits are taxed where economic activity and value creation occurs.

Which entities are required to have economic substance?

The ESRs applies to the following entities:

  • non-resident domestic entities (NRDEs) which are tax residents in the Republic of Marshall Islands; and
  • foreign maritime entities (FMEs) centrally managed and controlled in the Republic

What is considered to be "relevant activities":

Entities that are tax resident in a jurisdiction outside of the Republic of Marshall Islands do not need to comply with the economic substance requirements but, satisfactory evidence of their tax residency must be provided.

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