Marshall Islands Inheritance & Estate Tax for Non-Residents

Inheritance & Estate Tax in the Marshall Islands: An IntroductionCopy link to section

The Marshall Islands does not levy inheritance tax, estate tax, or death duties of any kind. For a foreign owner or investor holding assets through a Marshall Islands entity or trust, this means no local charge arises when ownership passes on death, and no succession or probate tax applies at the point of transfer. The position rests on the structure of the Republic's tax statutes, principally the Business Corporations Act 1990 and the Trusts Act 1994, which together leave estates and lifetime transfers outside any local death-duty charge.

This article explains the legal basis for that zero-tax outcome, how it applies to company shares and trust-held assets, and where foreign death duties can still reach assets connected to the jurisdiction. The Republic operates a fee-based, territorial system under a Compact of Free Association with the United States, and its public revenue depends on registration income rather than direct taxation.

It is most relevant to non-resident business owners, estate planners, and advisers weighing whether to hold assets or structure succession through a Marshall Islands company or trust.

Does the Marshall Islands Levy Inheritance or Estate Tax? Confirming the Zero-Tax PositionCopy link to section

The central fact is straightforward: there is zero inheritance tax, zero estate tax, and zero death duty. No charge arises when assets held through a non-resident entity pass to heirs or beneficiaries.

This applies in full to Non-Resident Domestic Corporations, which face no estate, gift, or stamp duty on international transactions. A company not conducting business within the country is exempt from local income, profit, dividend, royalty, and capital gains tax as well.

The exemption covers income, profits, dividends, capital gains, and interest earned outside the Republic at a rate of precisely 0%. No withholding applies to dividends paid to foreign shareholders, and no death-related tax attaches to a transfer of beneficial ownership.

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The Legal Basis for the Absence of Death Duties: The Trusts Act, the Income Tax Act and the Business Corporations ActCopy link to section

The absence of death duties follows from how the governing statutes are drafted rather than from any single exemption clause for estates. Three instruments work together.

The Business Corporations Act 1990, contained within the Associations Law, grants a blanket exemption to non-resident corporations, partnerships, trusts, and limited liability companies. These entities are released from corporate tax, income tax, withholding tax, asset tax, stamp duty, and other fees, leaving no statutory hook on which an estate charge could rest.

The Trusts Act 1994 governs estate planning and wealth management, and under it the jurisdiction imposes no estate, inheritance, or gift tax. The Income Tax Act 1989, found in Chapter 1 of Title 48 of the Revised Code, sets the rules for individual tax liability but contains no provision for taxing estates or inheritances.

The Associations Law, first enacted in 1990, also houses the Revised Partnership Act, Limited Partnership Act, and Limited Liability Company Act. The official courtesy text sets out the exemption language in full.

No Gift Tax: Treatment of Lifetime TransfersCopy link to section

Lifetime transfers attract no local tax. The Trusts Act 1994 confirms the absence of gift tax alongside estate and inheritance tax, which opens the door to multi-generational transfer planning without a domestic charge on the gift itself.

There is no annual gift tax filing for offshore entities or non-resident individuals. No lifetime gift allowance, no cumulative gift tax, and no clawback mechanism appears anywhere in the Republic's law.

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Transfer of Assets on Death: How Estates Pass Without a Local Tax ChargeCopy link to section

When assets pass on death, no probate tax, estate duty, or succession duty is levied at the point of transfer. The change in ownership occurs without a local fiscal charge attaching to the estate.

Domestic inheritance can be governed by both statutory and customary law. Where a person dies without a will, property typically passes to heirs under the customary system, with disputes resolved through local councils or the courts.

A point of confusion deserves clearing up. Stamp duty can apply to conveyances of real property, and property transactions require registration with the Office of the Clerk of the Supreme Court, but this attaches to land conveyances, not to the death transfer; the Stamp Duty Act 1992 exempts offshore corporate share transfers. There is also no annual property tax.

One structural limit matters for foreign nationals. Land is privately owned by Marshallese citizens, and foreigners may only lease, never own, so domestic real property does not form part of a foreign-owned estate in the first place.

Treatment of Foreign Assets and Cross-Border EstatesCopy link to section

Foreign-sited assets owned by or transferred through a local entity or trust face no estate or inheritance tax on death. The territorial system exempts foreign income of non-resident entities as a deliberate policy choice expressed in legislation, and that logic carries through to assets held abroad.

The real exposure sits outside the jurisdiction. A beneficiary's or deceased's home country may levy its own death duty on assets held through a local structure, depending on that country's domicile, citizenship, or situs rules.

No bilateral estate or inheritance tax treaty has been identified. That absence cuts both ways: there is no relief mechanism if a foreign jurisdiction asserts its own estate tax on assets connected here, so home-country rules govern that outcome.

US citizens and taxpayers from countries that tax worldwide income must continue to declare all income to their own revenue authority.

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Inheritance of IBC Shares and Trust-Held Assets on DeathCopy link to section

Shares in a Non-Resident Domestic Corporation, the most widely used offshore vehicle, pass on death without a local tax charge. The BCA 1990 exemption extends to ownership transfers of these shares, giving planners certainty that a change in beneficial ownership triggers no charge at the point of transfer.

Such companies are used to hold securities and bank accounts, enter joint ventures, conduct international trade, register vessels, and serve as the centre of estate and asset-protection planning. The tax certainty on succession is part of why they appear in these structures.

Shares can be held in three ways, and the death-transfer outcome is the same in each:

• Directly by the individual owner
• Through a nominee
• Through a trust established under the Trusts Act 1994

Trust continuity on the death of a settlor or beneficiary is governed by the Trusts Act 1994 without any accompanying death duty. The Act also frames estate planning more broadly, allowing wealth and assets to move without an added local tax liability.

What the Absence of Inheritance & Estate Tax Means for Companies and InvestorsCopy link to section

For holding companies and asset vehicles, the combined absence of capital gains, withholding, and inheritance tax removes several points where tax would otherwise leak from a structure. That matters most where assets are intended to pass across generations.

Dividend distributions to foreign shareholders reach the recipient in full, with no local withholding deduction and no need to claim treaty relief or file a reclaim. Share transfers and corporate restructuring carry no stamp duty, which lowers the cost of moving ownership during life or on death.

Reporting obligations are limited: non-resident companies have no requirement to file financial statements or tax returns locally. The practical effect is a clean base for wealth preservation, provided foreign obligations are handled separately.

Estate Planning Considerations and Common Pitfalls (Including Foreign Death-Duty Exposure)Copy link to section

The most common error is to read the zero local position as full protection. It is not. Death duties levied by the deceased's or beneficiary's country of domicile or citizenship still apply: US estate tax reaches the worldwide assets of US citizens, and UK inheritance tax reaches UK-domiciled individuals wherever their assets sit.

Economic substance obligations are a second area to manage carefully. Under the Economic Substance Regulations 2018, in force from 1 January 2019, non-resident domestic entities and foreign maritime entities must file reports through the secure online portal within twelve months of the entity's anniversary date.

The penalties for getting this wrong are material:

• Up to USD 50,000 for a first offence
• Up to USD 100,000 for continued non-compliance
• Dissolution or revocation of the entity, with information exchange to foreign tax authorities

Privacy is a genuine planning feature but not a shield against information exchange. The Associations Law does not require public disclosure of shareholders, directors, or beneficial owners, yet financial account data is shared annually under CRS, and foreign authorities can use it to assess estate tax on assets nominally held through local structures.

Two further traps recur. Land cannot be owned by foreigners, so it cannot sit inside an offshore estate structure for a non-citizen. And the Compact of Free Association as originally executed in 1982 exempted Marshallese and FSM citizens not in US trade or business from US income, estate, gift, and GST tax, but Congress amended that on ratification in 1986, so any residual US position must be confirmed with US tax counsel.

Outlook: Will the Marshall Islands Introduce Inheritance or Estate Tax?Copy link to section

No legislation proposing an inheritance or estate tax has been identified, including in the Parliament's legislative database. The introduction of a death duty in the near term finds no support in available evidence.

The reasoning is structural. Public revenue rests on registration fees rather than taxation, a model stable for decades, and a death duty would cut directly against the offshore proposition the Republic depends on.

External pressure has produced change, but in defined areas. After the EU added the jurisdiction to its non-cooperative list and ECOFIN found substance enforcement insufficient, the response was tighter economic-substance enforcement, not a new tax.

The wider scrutiny from the OECD, EU, and FATF centres on substance and corporate transparency. None of it targets death duties, and the zero-tax principle on foreign income has held even after substance rules came in. The jurisdiction has also not signed the BEPS Multilateral Instrument.

ConclusionCopy link to section

For a non-resident owner, the absence of any local death duty on IBC shares or trust-held assets removes one layer of cost and complexity from succession planning, but that absence does not neutralise the exposure that the owner's home country or the country where underlying assets are situated may impose on the same transfer. The decision-relevant question, therefore, is not whether the Marshall Islands charges a death duty, because it does not, but whether the jurisdictions connected to the owner or their assets do, and how the structure interacts with those foreign rules.

Reviewing the outlook for potential change matters precisely because any future introduction of inheritance or estate tax would alter the calculus for structures already in place. Getting cross-border estate exposure assessed now, before succession becomes a live event, is the concrete next step this analysis points toward.

How Expanship Can Help Your Business in the Marshall IslandsCopy link to section

Expanship supports foreign owners in confirming how the zero inheritance and estate tax position applies to their specific structure, and in keeping the entity compliant so that succession planning is not undone by an administrative lapse. That work sits within a wider set of services for a foreign-owned entity in the jurisdiction.

• Company formation, including Non-Resident Domestic Corporations
• Registered agent and registered office services
• Tax registration and required filings
• Ongoing compliance management, including economic-substance reporting
• Accounting and bookkeeping support
• Introductions to banking partners

To discuss how succession and compliance apply to your structure, contact Expanship Marshall Islands.

Frequently Asked QuestionsCopy link to section