Social Security applies to all employees working within the Marshall Islands and RMI citizens working outside the Marshall Islands, and includes self- employed persons, with or without employees. It also applies to every employer doing business in the Marshall Islands, which is required to contribute an amount equal to that contributed by employees.
Currently, the maximum taxable wages for employees is $10,000 per calendar quarter. In the case of self employed individuals with one or more employees, the tax is based on the actual wages or at twice the wages of the highest paid worker, whichever is greater, in the calendar quarter the employees whose earnings were reported.
Self-employed individuals without employees are taxed based on their gross revenue per calendar quarter, which is multiplied by 75% to arrive at the gross taxable wages.
Taxable earings cover compensation of any kind, including without limitation any salary, wage, bonus, tip, stipend, allowance of fee, paid by the employer to or on behalf of the worker in cash or in any other form, but not including:
- all wages received by virtue of any international agreement
- income earned outside the Marshall Islands
- compensation for sickness or accident (other than sick leave)
- reimbursement of medical or hospitalization expenses
- payment from trust or annuity
- payment for casual labor not exceeding one week in any month of a quarter if the worker is not performed in the course of the employer's trade or business
- reasonable housing and travel allowances
- all wages in excess of the maximum taxable wages of $5,000 from January 1, 2001 to March 05, 2017
- New maximum taxable wages is now increased from $5,000 to $10,000.
All employers are required to file the quarterly SS tax returns and play the contributions within the ten day period following the end of each quarter ending on:
- March 31st
- June 30th
- September 30th
- December 31st
Reporting deadline shall be:
- 1st quarter - April 10th
- 2nd quarter - July 10th
- 3rd quarter - October 10th
- 4th quarter - January 10th
Workers and their employers each contribute a percentage of their wages to the Retirement and Health Funds according to the following schedule:
- Retirement Fund: 7% for wages paid from 1, 2001 to March 05, 2017
- New retirement fund rate: 8% wages paid from March 06, 2017 to present
- Health Fund: 3.5% for wages paid from January 1, 2002 to present