Marshall Islands Social Security Contributions

Principal provisions
·*Coverage - Social Security applies to all employees working within the Marshall Islands and RMI citizens working outside the Marshall Islands, and include 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 $5,000 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.

*Exemptions - the following wages or payments received are exempted from MISSA taxes:
o all wages received by virtue of any international agreement
o income earned outside the Marshall Islands
o compensation for sickness or accident
o payment from trust or annuity
o payment not exceeding one week in any month of a quarter
o housing and travel allowances
o all wages in excess of the maximum taxable wages of $5,000 per quarter

*Reporting period - all employers are required to file the quarterly SS tax returns and pay the contributions within the ten day period following the end of each quarter ending on March 31st, June 30th, September 30th and December 31st. Reporting deadlines shall be: 1st quarter - April 10th, 2nd quarter - July 10, 3rd quarter - October 10th and 4th quarter - January 10th.

*Contributions - workers and their employers each contribute a percentage of their wages to the Retirement and Health Funds according to the following schedule:

Retirement Fund:

3% for wages paid from October 1, 1987 to June 30, 1990
4% for wages paid from July 1,1990 to Sept. 30, 1990
5% for wages paid from October 1, 1990 to June 30, 1995
6% for wages paid from July 1, 1995 to March 31, 1997
5% for wages paid from April 1, 1997 to Dec. 31, 2000
7% for wages paid from January 1, 2001 to present

Health Fund:

2.5% for wages paid from Oct. 1, 1991 to March 31, 1997
3.5% for wages paid from April 1, 1997 to Dec. 31, 2000
2.5% for wages paid from Jan. 1, 2001 to Dec. 31, 2001
3.5% for wages paid from January 1, 2002 to present

*Refunds - if a worker contributes on earnings in excess of the covered earnings, whether from one or more employers, and his contributions are withheld and paid to the Administration, the excess of the workers' contributions during the four (4) quarters ending December 31st shall be refunded by the Administration to the worker within ninety (90) days after the date.

*Offenses and penalties
False statements and reports - Any person who knowingly makes a false statement or declaration, or falsifies any report to or records of the Administration in an attempt to defraud the Administration, is guilty of an offense and shall upon conviction, be liable to imprisonment for a period of not more than one (1) year or to a fine of not more than two thousand dollars (US $2,000), or both.

Failure to report - (i) Any employer or self-employed worker who fails to report any amount of earnings paid or fails to pay any amount of contributions due to the Administration is, at the discretion of the Administration, liable to a penalty of not more than one hundred percent (100%) of the total amount of the contributions withheld, including workers' and employers' shares, or two hundred and fifty dollars (US $250.00), whichever is greater.

(ii) Any employer or self-employed worker who knowingly fails to report any amount of earnings paid or knowingly fails to pay any amount of contributions due, including penalties and interest to the Administration is, in addition, guilty of an offense and shall upon conviction, be liable to a fine of not more than five thousand dollars (US $5,000.00)

*Examination and copy of records - Any person who willfully fails to allow the Administration to examine and copy books, accounts, records and other information pursuant to its authority under Section 119(2) (e) of Chapter 1 of the Social Security Act of 1990, shall be guilty of an offense and shall upon conviction be liable to a term of imprisonment not exceeding one year, or to a fine of not more than five thousand dollars (US $5,000.00), or both.