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President Mori signs into law the Revenue Administration Act of 2012

Palikir, Pohnpei (FSM Information Services): May 2, 2012 - In the Morning of May 1, 2012, President Manny Mori signed into law the new Revenue Administration Act of 2012 (RAA).

In a transmittal letter to Speaker Isaac V. Figir regarding the signing of the RAA, President Mori underscores his appreciation to Congress for its leadership commitment to the on-going nation-wide tax reform effort by passing the Revenue Administration Act during its March 19 to April 2, 2012 session and for passing the Unified Revenue Authority Act a year ago, which became law on April 19, 2011 as Public Law No. 16-75.

According to the President, the Governments of the FSM have dedicated significant amount of time and energy in working on various reforms to the tax system since 2004, drawing substantive discussions across the five governments and comprehensive stakeholders' engagement the past four years.

"I draw your attention to the fact that technically, the new Unified Revenue Authority commenced administration on 19 April 2012. However, substantive work is needed before the Unified Revenue Authority can become operational. Your further support in these processes is absolutely vital to the success of the Unified Revenue Authority", the President states in his transmittal to Speaker Figir, stressing the need for both the Executive and Congress to maintain collaboration on the tax reform undertakings.

Having passed the Revenue Administration Act and the Unified Revenue Authority, the Congress can now focus on other inter-dependent elements of the tax reform package through various pending legislative changes that are deemed vital to the comprehensive sustainable framework for economic reform. These changes include the Net Profit Tax, which is intended to replace the Gross Revenue Tax; changes to standardize customs duty at 10% in line with proposed State VAT rates; and change to the wages and salary tax through reform of the tax-free threshold, among others.

President Mori concludes his letter by requesting for Congress's assistance with the various legislative changes pending before Congress in order to solidify progress in strengthening the overall tax regime as a part of building a viable financial climate.