FSMC, TITLE 54.  TAXATION AND CUSTOMS

CHAPTER 3
Income Tax Regime
for FSM Corporations

Editor’s note: Section 2 of PL 13-71 added a new chapter 3 entitled Income Tax Regime for FSM Corporations.

This chapter has been subdivided into subchapters to improve its organization. Also, the numbering of the sections in PL 13-71 indicated an intent to subdivide this chapter into subchapters.

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SUBCHAPTER I
General Provisions

SECTIONS

§ 311. Short title.
§ 312. Definitions.
§ 313. Applicability of this chapter.
§ 314. Filing of report.
§ 315. Continued applicability of this chapter.

§ 311. Short title.

This chapter may be cited as the “Corporate Income Tax Act of 2004”.

Source: PL 13-71 § 2.

Cross-reference: The statutory provisions on Corporations and Business Associations are found in title 36 of this code. The statutory provisions on Commercial Law are found in title 33 of this code.

Editor’s note: Section 2 of PL 13-71 added a new chapter 3 entitled Income Tax Regime for FSM Corporations.

This chapter has been subdivided into subchapters to improve its organization. Also, the numbering of the sections in PL 13-71 indicated an intent to subdivide this chapter into subchapters.

§ 312. Definitions.

(1) “Control group” of a corporation for purposes of this chapter shall mean a group of corporations comprising of:

(a) the corporation,

(b) other corporations in which the corporation owns directly or indirectly 80% or more of the shares,

(c) other corporations that own directly or indirectly 80% or more of the shares of the corporation, and,

(d) corporations other than the corporation described in paragraph (a) of this section or corporations described in paragraph (b) of this section, or corporations where 80% or more shares are owned directly or indirectly by the corporations described in paragraph (c) of this section.

(2) “Major Corporation” means any corporation not principally engaged in business in the Federated States of Micronesia as a bank (as such term is defined in title 29 of this code, section 102(1)), formed on or after January 1, 2005, and,

(a) whose shareholders equity or paid-in capital as of the beginning of its fiscal year is $1,000,000 or more; or

(b) the aggregate amount of the shareholders equity or paid-in capital of the control group is $10,000,000 or more; or

(c) that is a captive insurance company licensed pursuant to title 37 of this code regardless of the amount of capitalization.

(3) “Secretary” means the Secretary of the Department of Finance and Administration.

(4) “Taxable Year” shall mean the fiscal year of the major corporation as reported to the Secretary under section 314 of this chapter.

(5) “Paid-in Capital” for purposes of this chapter shall mean the total amount of consideration contributed to the company for the issuance of shares.

Source: PL 13-71 § 3; PL 14-110 § 1; PL 16-52 § 1.

Cross-references: Title 29 of this code is on Commercial Banking. Title 37 of this code is on Insurance.

§ 313. Applicability of this chapter.

Taxes imposed under this chapter shall apply to all major corporations incorporated in the Federated States of Micronesia as defined in section 312.

Source: PL 13-71 § 4; PL 14-110 § 2; PL 16-19 § 1; PL 16-52 § 2.

Cross-reference: Title 29 of this code is on Commercial Banking.

§ 314. Filing of report.

A major corporation shall file an initial written report with the Secretary. The written report shall be signed by the authorized representative of the major corporation and shall state:

(1) the true and correct name of the major corporation;

(2) the taxpayer identification number or other identifying number, if any, of the major corporation;

(3) the mailing and office address of the major corporation;

(4) the name, address, telephone, and fax numbers of the authorized representative for the major corporation;

(5) the nature of the major corporation’s principal business; and

(6) the last day of the major corporation’s fiscal year.

The report shall be filed by the major corporation within 60 days of the major corporation becoming subject to this chapter.

Source: PL 13-71 § 5.

§ 315. Continued applicability of this chapter.

A major corporation subject to taxation under this chapter shall continue to be subject to taxation under this chapter through the last day of the taxable year in which it meets the criteria set forth in section 313 of this chapter on any day of such taxable year.

Source: PL 13-71 § 6.