Micronesia

Foreign Investor's Permit

The Foreign Investor's Permit allows foreign nationals to reside in the Federated States of Micronesia (FSM) for the purpose of managing and operating a business investment. It is one of twelve entry permit categories under the FSM Immigration Act and is directly tied to holding a valid Foreign Investment Permit issued under the Foreign Investment Act. The program is administered by the Division of Immigration and Labor within the FSM Department of Justice, while the Foreign Investment Permit itself is issued by the Department of Resources and Development or individual state authorities. The FSM uses the U.S. Dollar as its currency.

Foreign investment sectors are organized into three categories: a Red List of prohibited activities (arms manufacture, currency minting, nuclear power), an Amber List of regulated sectors requiring specific criteria (banking, insurance), and a Green List of sectors freely open to foreign investment (telecommunications, fishing in the Exclusive Economic Zone, international air transport, international shipping).

• Must hold a valid Foreign Investment Permit issued under the FSM Foreign Investment Act
• Must submit a business plan and proof of capital as part of the investment permit application
• No specific minimum capital investment at the national level, though state-level requirements may apply
• No educational or professional qualifications required
• Citizens of the United States, Republic of Palau, and Republic of the Marshall Islands are exempt from entry permit requirements under their respective Compact of Free Association agreements

• Completed entry permit application form
• Valid passport with at least 120 days validity beyond date of entry
• Signed photograph
• Employer/sponsor details in the FSM
• Proof of return or onward travel
• Prescribed Foreign Investment Permit application form (Schedule 5 of Regulations)
• Business plan
• Proof of capital
• Identification of a resident agent for service of process

The Foreign Investor's Permit is issued for up to one year, linked to the validity of the underlying Foreign Investment Permit. Both permits are renewable annually. Renewal of the Foreign Investment Permit is automatic upon payment of annual fees with no additional documentation required. The entry permit is renewed upon renewal of the Foreign Investment Permit.

Spouses of permit holders may obtain a Family Member's Permit. Unmarried children under 18 may receive a Dependent's Permit. There are no separate financial requirements for dependant permits beyond the main applicant's requirements.

• Wage and salary tax: 6% on the first $11,000 and 10% on amounts exceeding $11,000 per year
• Gross revenue tax: $80 annual tax on revenues not exceeding $10,000, or 3% on revenues exceeding $10,000 (businesses earning $2,000 or less are exempt)
• Corporate income tax: 21% on taxable income for major corporations
• Social security: 7.5% employer and 7.5% employee on wages up to $10,000 per year
• Capital gains: Foreign-source capital gains are tax-exempt
• Quarterly gross revenue tax filings are due April 30, July 31, October 31, and January 31

The process involves two stages:

1. Foreign Investment Permit -- Submit the prescribed application form (Schedule 5) to the Department of Resources and Development (national level) or the relevant state authority. The Secretary categorizes the application within 5 business days and issues permits for qualifying investments within an additional 5 business days. Applications for Red List sectors are denied within 1 business day. No fee is charged at the national level.

2. Entry Permit -- Submit a completed entry permit application to the Division of Immigration and Labor, Department of Justice, in Palikir, Pohnpei, with supporting documents including the valid Foreign Investment Permit.

State-level Foreign Investment Permit fees vary: Kosrae $150; Chuuk $250 (plus $150 annual fee); Yap $250 (plus $100 annual renewal fee); Pohnpei $250 ($50 for preferred joint venture or alternate energy sectors).

Holders may only engage in business activities specified in their Foreign Investment Permit. Changing business activities requires obtaining a new permit or requesting modification of existing terms. Each Foreign Investment Permit automatically includes one Expatriate Worker Authorization for a senior management position, with additional authorizations available if regulatory criteria are met.

• Noncitizens may not own land in the FSM under a constitutional prohibition -- land may only be leased (typically 25-55 years depending on the state)
• Foreign investment is subject to local ownership requirements (51-60% minimum Micronesian ownership depending on sector)
• Capital repatriation exceeding $50,000 requires written approval from the Secretary of Resources and Development
• Permits are non-transferable between investments or investors

Links

• http://www.fsmlaw.org/fsm/code/title50/T50_Ch01.htm
• http://www.fsmlaw.org/fsm/code/title32/T32_Ch02.htm
• https://www.fsmlaw.org/fsm/regulations/forinvreg.htm
• https://fsmembassy.fm/fsm-entry-permit-application/

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