provisionally-partially-compliant

Marshall Islands

To see the determinations and rating of all published reports click here.

Overall rating is Provisionally Partially Compliant

Marshall Islands has been reviewed under the fast-track procedures and assigned provisional overall rating. Marshall Islands will be scheduled to undergo a full review under the strengthened 2016 Terms of Reference in the near future.

Table of Determinations and Ratings of the Phase 2 Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is not in place.   Bearer shares can be issued by non-resident domestic corporations in the Marshall Islands. Appropriate mechanisms to allow identification of owners of bearer shares are not in place.  The Marshall Islands should ensure that appropriate mechanisms to identify owners of bearer shares are in place. 
Ownership and identity information for nominee shareholdings is not available in all circumstances.   The Marshall Islands should ensure that ownership and identity information is available in respect of nominee shareholding.  
Phase 2 Rating Factors Recommendations
Non-Compliant.  Ownership information was not provided to requesting jurisdictions in the majority of cases. The Marshall Islands does not have effective monitoring and enforcement programmes in place to ensure that relevant entities comply with the obligations to maintain or provide ownership and identity information. This is of particular concern with regards to non-resident domestic entities.  The Marshall Islands should put effective monitoring and enforcement programmes in place to ensure all relevant entities comply with the obligations to maintain or provide ownership information. 
   
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Non-Compliant.  No system of monitoring compliance with accounting record keeping requirements for non-resident domestic entities is in place, which may result in the legal obligation to keep accounting records not being enforced. A number of clarifying amendments to the accounting record keeping obligations have only been introduced recently.  The Marshall Islands should ensure that reliable accounting information for all relevant entities are available at all times. 
There has been no effective enforcement of the accounting record keeping requirements during the review period.  The Marshall Islands should ensure that its enforcement powers are sufficiently exercised in practice.  
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  Two on-site inspections took place during 2013; however, the office of the Banking Commissioner was vacant during a majority of the review period.  It is recommended that the Marshall Islands quickly put in place a schedule of regular inspections of financial institutions so that their compliance can be effectively monitored. 
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Partially Compliant.  The Marshall Islands has powers in place to obtain information for EOI purposes but, during the review period, these access powers were ineffective in ensuring the provision of information from non-resident domestic entities.   The Marshall Islands should ensure that the access powers of its competent authority are used effectively to obtain all information included in an EOI request. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.     The Marshall Islands should continue to develop its exchange of information network with all relevant partners. 
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Partially Compliant.  During the three-year period under review, the Marshall Islands provided incoming EOI requests to the Registrar of Non-Resident Domestic Entities which is not in accordance with the principle that the information contained in an EOI request should be kept confidential. The Marshall Islands has revised its policy in relation to the disclosure of information in EOI notices.  The Marshall Islands should monitor the implementation of the revised policy on disclosure of information in EOI notices to ensure that it is compliant with effective exchange of information in practice. 
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  A number of peers have had difficulty contacting the Marshall Islands competent authority.  The Marshall Islands should ensure a good level of communication with its exchanges partners and ensure that its competent authority can be reached in all instances. 
The Marshall Islands put in place a new process for responding to EOI requests after the end of the review period and its effectiveness could not be adequately assessed. Further, the Marshall Islands received seven requests during the review period and its experience in handling these matters remains limited.   The Marshall Islands should monitor the practical implementation of the organisational processes and resources of the EOI program to ensure that they are sufficient for effective EOI in practice.  

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.