Where is the Federated States of Micronesia (FSM)?
The FSM is located between Guam and Papua New Guinea/Australia.
Is it a member of United Nations?
It has been a member of United Nations since 1991.
Is there a direct flight from Narita Airport? How long does it take to go there?
There is no direct flight. You need to transit on Guam. It takes 3.5 hours from Narita to Guam and 3.5 hours from Guam to Pohnpei via Chuuk. Only United Airlines is available between Guam and the FSM. There are 4 flights a week from Guam to Pohnpei. The best day to travel from Japan to Pohnpei is Sunday. You would leave Japan at about 10am and arrive Pohnpei around midnight.
What is the time difference?
2 hours (in Pohnpei). If it is 8 am in Japan, it is 10 am in Pohnpei.
What is the official currency of the FSM?
The US Dollar is the official currency of the FSM.
How many subsidiaries of Japanese companies are there?
There are over 60 FSM corporations owned by Japanese corporations and individuals.
What are the advantages of the FSM?
The FSM is not a tax haven per the definition of tax haven in the Japan tax laws.
FSM corporations may keep their books and records in Yen.
FSM corporations may submit all required reports to the government in Yen.
FSM Corporate Income Tax can be paid in Yen
Services in Japan and the FSM by MRA (a seminar is held once a year in Tokyo)
The FSM is always seeking ways to improve its Corporate Registry and Captive Insurance Domicile.
Excellent historical and cultural ties with Japan.
How much does it cost to establish a corporation in the FSM?
Captive insurance license fee: USD 500 (annually renewed before March 31, thereafter)
A FSM corporation is not required to have a FSM attorney. If the corporation would like an FSM attorney, MRA suggests the Ramp & Mida Law Office.
To establish a FSM corporation, Ramp & Mida Law Office charges a fixed fee of US$2,000 or an hourly charge of US$150.
To obtain a FSM captive insurance license, Ramp & Mida charges a fixed fee of US$3,000 or an hourly fee of US$150.
How much is running cost?
All FSM Corporations:
Tax return fee: It depends on volume and nature of transactions. Japanese CPA/Zeirishi can sign off the FSM corporate tax returns. Deloitte has an office in the FSM and can do the tax filings. The tax return can be signed by any officer of the corporation.
Captive manager fee: Please ask your captive manager
Actuary fee: Please ask your actuary
Audit fee: Please ask your auditor
POSA (Professional Office Service Agreement):
Plan A – USD 50 /month (Office Address and P.O. Box services)
Plan B – USD 100 /month (Services of Plan A + dedicated phone)
Plan C – USD 600 /month (Services of Plan A + B + Office rental at VB Center)
How long does it take to complete the establishment procedure?
It takes 1 week after submitting application to ROC for a new company and 4 – 6 weeks for captive license.
What address should a FSM company use?
MRA offers POSA. (Please see (2) above.)
Which bank should be used?
There are the Bank of FSM and the Bank of Guam in the FSM, but there is no restrictions with regard to banks. Any bank in any country (including a branch of Japanese bank located in Japan) is acceptable. Some FSM corporations use a branch in Japan of Japanese banks.
What procedure should be done to establish a company in the FSM?
Input data via MRA’s website: Please submit Articles of Incorporation. Article must be notarized at FSM Embassy or by a FSM notary.
Are there law firms and CPA firms in the FSM?
Law firms: Ramp & Mida
CPA firms: Deloitte and E&Y (E&Y operates from Guam)
Is there tax treaty with Japan?
There is no tax treaty with any country. However, FSM does not levy withholding tax on dividend and interest, so a tax treaty is not needed in the payment of dividend and interest.
Is there inheritance tax or gift tax in the FSM?
What is the minimum revenue (sales, rent revenue, etc.) of a company that can enjoy the tax merit of the FSM?
Please consider the tax saving vs. cost of operating a subsidiary. Costs of captives can be significant. Generally, unless a company has USD 1 million in insurance premiums, captive insurance companies are not feasible.
Captive Insurance Companies
What kind of risks are insured?
Marine cargo, product liability, property, workman’s compensation, liability, travel, fire, auto, accident, health, and earthquake, etc.
What is the average gross insurance premium of FSM captive companies?
From USD 5 million to 45 million.
What captive managers are licensed in the FSM and available?
Aon Insurance Managers Pte. Ltd.
Blue Ocean Risk Management Ltd.
Chartis Insurance Management Services, Inc. (established by AIG)
First Risk Management Services, Inc. (a 100% subsidiary of Tokyo Marine)