Micronesia
AI Agent Legal Status: undefined · Autonomy: none
Legal Framework
The Federated States of Micronesia has no AI-specific legislation, DAO recognition, or digital asset framework. The country is focused on digital infrastructure development through the World Bank-funded Digital FSM Project and improving connectivity (East Micronesia Cable, Starlink gateway). The Telecom Act 2014 created an independent Telecommunication Regulation Authority (TRA) and enabled open-access wholesale fiber. Corporate laws of 2009 and Corporate Registry Act 2005 govern business formation. FSM uses the US dollar and has close ties to the US through the Compact of Free Association.
Key Laws & Regulations
- ◆Federated States of Micronesia Code – Corporate Laws 2009
- ◆Corporate Registry Act 2005 (Public Law 13-70)
- ◆Corporate Registry Regulation Title 37 (2006)
- ◆Telecommunication Act 2014
- ◆Foreign Investment Act
Business Formation
Corporation, Partnership, Sole Proprietorship. 100% foreign ownership permitted. No minimum share capital. Shareholder names not in public records. Registration takes approximately one week. Foreign Investment Permit required for non-citizens. Up to 5-year exemption from customs duties and GRT rate changes available for foreign investors.
Tax Implications
Corporate income tax 21% (with broad exemptions for companies under USD 10M control group equity, under USD 1M equity, or pre-2005 incorporations). Business Gross Revenue Tax: USD 80 on first USD 10K, 3% on excess (only on FSM-sourced revenue). Wages tax 6% on first USD 11K, 10% on excess. No national VAT. State-level sales taxes vary. US dollar is official currency.
Opportunities
Leverage broad corporate tax exemptions and GRT exclusion on foreign revenue. Use 100% foreign ownership and shareholder privacy for AI holding companies. Participate in Digital FSM Project infrastructure development. Provide AI solutions for telemedicine, education, and government services across islands.
Highlights
Low effective tax rate with broad corporate income tax exemptions. 100% foreign ownership allowed. Shareholder privacy. US dollar economy. Close US relationship through Compact of Free Association. GRT exemption for revenue generated outside FSM. Improving connectivity (East Micronesia Cable 2025, Starlink).
Risks & Challenges
No AI, DAO, or digital asset frameworks. Foreign Investment Permit required. Very limited digital infrastructure (40.5% internet penetration). Small population (~113K). Geographic dispersion across islands. Limited skilled workforce. State-level regulatory fragmentation.