FSM set to operationalize the new Unified Revenue Administration system

FSMIS (September 19, 2014): On September 18, 2014, the Federated States of Micronesia Vice President Alik L. Alik convened the Executive Steering Committee (ESC) for the FSM Tax Reform Program at the President’s Cabinet Room, Palikir, Pohnpei.

The ESC consists of the Vice President as chairman and the four Governors of the State Governments in the FSM: Governor Sebastian Anefal, Yap State; Governor Johnson Elimo, Chuuk State; Governor John Ehsa, Pohnpei State, and Governor Lyndon Jackson, Kosrae State.

After welcoming ESC members to Palikir, Vice President Alik briefed the Governors on President Manny Mori’s decision to transition the FSM Division of Customs and Tax Administration (CTA) to the Unified Revenue Authority (URA) in Fiscal Year 2015 and solicited further input from the Executives.

The URA was created through FSM Public Law 16-75, which is known as the FSM Unified Revenue Authority Act of 2010.

Mr. Rensley Sigrah, the Tax Reform Program manager, also helped in guiding discussions, drawing attention to earlier ESC recommendations with respect to revenue reform for all governments and the need to transition to the URA in FY15.

It was pointed out that current CTA personnel will move into a new system under the URA, with governing power vested in a 5-member Board of Trustees. The transitioning will be initiated on October 1^st with the expectation that the URA will be able to assume full-blown administrative capacities by January, 2015.

In general, the ESC concurs to having the URA oversee the administration of taxes for the FSM National Government and the State Governments as part of longstanding endeavor to reform tax regime in the FSM and maintain a unified front for all the governments. It is also the position of the ESC to prevent over-burdening of any of the participating governments as far as the initial financing of the URA’s administrative and related costs as the system charts a new way forward.

Additionally, the meeting allowed members to jointly review the current status of the Tax Reform program after the Revenue Administration Act (RAA) went down with the Sunset Clause mandate. The mandate required that the RAA could only be implemented if all the State Governments enacted their respective Value Added Tax (VAT) by April 30, 2014. Only Chuuk State and Kosrae State opted to enact the VAT Tax. However, ESC members stressed their common view that the remaining States that chose not to enact their VAT Tax before the “sunset” clause deadline could still determine to do so in the future to be in sync with the others.

At the end of the meeting, Vice President Alik conducted the oath of office for Pohnpei States representative on the URA Board of Trustee, Ms. Christina Elnei, who is currently the Acting Director of the Pohnpei State Department of Finance, bringing the Board to full membership.

Other members of the Board took part in the ESC meeting as observers. Later on during the day, the Board held its own session also at the President’s Cabinet Room.

For further information, please contact Tax Reform Program at 320-6553 or email fsmpio@mail.fm.