Business Registration in Micronesia

Micronesia offers several business entity types for local and foreign investors. This guide provides a step-by-step overview of the registration process, costs, and ongoing compliance obligations for businesses operating in the FSM.

Available Business Structures

Limited Liability Company (LLC)

The LLC is the most common business structure for small to medium-sized enterprises in Micronesia.

• Minimum Share Capital: No minimum requirement
• Shareholders: Minimum 1, no maximum
• Directors: Minimum 1 (may be corporate entity)
• Liability: Limited to share capital
• Tax Residency: Place of effective management in FSM

Corporation

Suitable for larger enterprises and foreign investors.

• Minimum Share Capital: USD 10,000
• Shareholders: Minimum 1
• Directors: Minimum 3 (majority must be residents)
• Audit Requirements: Annual audit required

Branch of a Foreign Company

Foreign companies may establish a branch in Micronesia.

• Registration: Foreign company registration certificate required
• Local Representative: Must appoint a local representative
• Liability: Branch is not a separate legal entity

Sole Proprietorship

The simplest business structure for individual entrepreneurs.

• Registration: Simple registration with the Business License Office
• Liability: Unlimited personal liability
• Taxation: Income taxed at personal PIT rates

Registration Procedure

Step 1: Name Reservation

Reserve the company name with the FSM Department of Commerce and Industry. The name must end with a legal form indicator (e.g., "LLC", "Inc.").

Step 2: Company Registration

File the articles of incorporation and required documents with the Registrar of Companies.

Step 3: Tax Registration

Register with the Tax Division for a Tax Identification Number.

Step 4: Social Security Registration

Register with the FSM Social Security System.

Step 5: Business License

Apply for a business license. Licenses are renewed annually.

Costs and Timeline

• Name Reservation: Nominal fee
• Company Registration: Approximately USD 250
• Business License: Varies by business type and revenue
• Processing Time: 2-4 weeks for full registration

Ongoing Compliance

• Annual Return: Must be filed with the Registrar of Companies
• Tax Returns: Annual CIT return due by April 30
• PAYE Returns: Monthly withholding returns
• Social Security Returns: Monthly contribution declarations
• Business License Renewal: Annual renewal