These measures are the results of the work of the Tax Executive Steering Committee, which is led by Vice President Alik Alik and all four state governors.
The bills will implement the recommendations of the Tax Reform Task Force at both the national and state levels.
In addition to the FSM Congress, the four state legislatures will also be considering the bills, which are meant to improve the tax administration and tax system of the FSM.
The proposed laws are the FSM Unified Revenue Authority Act, the Revenue Administration Act, the Net Profit Tax Act, the National VAT Act, and the Wages and Salaries Tax amendment to exempt the first $5,000 from everyone’s salaries from taxes.
The bills will make several changes to Title 54 of the FSM Code.
The draft Net Profit Tax Act and the URA Act are proposed to enact new Chapters, 5 and 7, under Title 54. The draft Revenue Administration Act is proposed to amend, repeal and enact new provisions to Chapter 8. The National VAT Act is also proposed to amend Chapter 2 of Title 54 by repealing the import duties and in its place imposing a VAT on imports, which will be creditable against State VAT on subsequent supplies. There are also proposed amendments to Subchapter II and III (Taxation of Wages and Salaries) of Chapter 1.
Mori has endorsed the concept and the recommendations of the Task Reform Task Force in the effort to improve the FMS’s tax administration.
In his transmittal letter to Speaker Isaac Figir, Mori said he is very pleased with their work in putting together the draft legislation after the assessment of the current tax bills was done.
He said due to urgency and the requirement to meet certain deadlines, he is sending the draft legislation for congressional review and consideration with the understanding that the executive branch will need to provide further comment on the bills at a later stage.
No action was taken on the legislation during the special session, but the FSM Congress will hold public hearings before and during the next regular session in May to garner feedback on the measures.
