Federated States of Micronesia Tax Rates
The Federated States of Micronesia (FSM) uses the United States Dollar and operates a basic tax system centered on a wage and salary tax and a gross revenue tax for businesses. As a Compact of Free Association state with the US, FSM receives substantial financial assistance from the United States. The country comprises four states — Yap, Chuuk, Pohnpei, and Kosrae — each with some degree of fiscal autonomy. There is no VAT/GST, no capital gains tax, and no tax on investment income.
Top Income Tax Rate
10%
Corporate Tax Rate
3%
VAT / Sales Tax
0%
Capital Gains Tax
0%
Detailed Tax Information
Income Tax Brackets
The FSM levies a wage and salary tax on employment income. The first USD 11,000 of gross wages is taxed at 6%, and wages exceeding USD 11,000 are taxed at 10%. There is no tax-free threshold. The tax applies to all wages and salaries earned within the FSM. Employers withhold the tax at source. Investment income, interest, and dividends are generally not subject to income tax at the national level.
| Income Range | Tax Rate |
|---|---|
| $0 – $11K | 6% |
| $11K+ | 10% |
Corporate Tax
The FSM imposes a Gross Revenue Tax (GRT) of 3% on the gross revenue of all businesses operating within the country. This is levied in place of a traditional corporate income tax. The tax applies regardless of whether the business is profitable. Individual states within the FSM may levy additional taxes or fees on businesses operating within their jurisdiction.
Standard Rate
3%
Capital Gains Tax
The Federated States of Micronesia does not impose a capital gains tax. Profits from the sale of property, investments, or other capital assets are not subject to national taxation.
Rate
0%
VAT / Sales Tax
The FSM does not have a VAT or GST system. Government revenue from consumption comes primarily through import duties. Each of the four states may levy its own sales taxes or fees. Revenue from the Compact of Free Association with the United States remains the most significant funding source.
Standard Rate
0%
Cryptocurrency Tax
The FSM does not have specific legislation or guidance on cryptocurrency taxation. Digital currency activities are not regulated by the FSM national government. Any business income from crypto activities could theoretically be subject to the gross revenue tax.
Tax Treaties
The FSM does not have any double taxation agreements. Its primary fiscal relationship is with the United States through the Compact of Free Association. The simple gross revenue-based tax system limits cross-border tax complications.
Treaty Network
0
Double taxation agreements
Key Details
Relocate to Federated States of Micronesia
See how much you could save by moving here from your current country.
+$7K
Tax in United States
$24K
24.4% effective
Tax in Federated States of Micronesia
$17K
17.1% effective
You Save
30%
less tax annually
US Citizens: Important Note
US citizens are taxed on worldwide income regardless of residence. You'll still need to file US taxes, though the Foreign Earned Income Exclusion and Foreign Tax Credit may reduce your liability.
