Macau, China’s second special administrative region after Hong Kong, is located in the south of the country, on the opposite side of the Pearl River Delta from Hong Kong. It is a major financial center and an open port without currency controls, which attracts investors along with the absence of VAT and exemption from certain taxes for companies with an offshore license.
(Depending on the type of work and qualifications of the employed person, but not less than 1,900 USD)
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Macao operates a two-tier accounting standards system:
1. General Financial Reporting Standards.
These are 15 simplified standards applied to small and medium-sized enterprises.
2. Financial Reporting Standards.
These are adopted international financial reporting standards (2015). They are approved by Order of the Secretary for Economy and Finance No. 44/2020. They came into force on 28 March 2020 and replaced the standards that were adopted IFRS (2004) approved by Annex II of Administrative Regulation No. 25/2005.
A certain list of companies stated in Article 4 of Administrative Regulation No. 25/2005 can switch to the new standards on 01.01.2022 and later and use the old standards for earlier reporting periods. Ultimate parent companies, according to article 1-A of the Regulation of Supplementary Tax on Income in Force, approved by Law No. 21/78/M, of 9 September, must use the new standards for the purpose of preparation of their financial statements.
The key difference between the new standards and the old standards is that the old standards adopted 16 IFRS (2004) and the new standards adopted IFRS (2015) in full and thus cover more matters of preparation of financial statements.
FRS apply to financial institutions, concessionaires and limited liability companies. Companies that are not in these categories but must keep accounting records can choose between FRS and GFRS.
The currency of accounts is the local currency, Macanese pataca (MOP), according to Article 46 of the Macao Commercial Code related to "External Requirements of Bookkeeping". Financial statements can be in any foreign currency, but must be converted into the local currency.
Legislation does not require financial statements to be presented to the Macao Financial Bureau.
There are no general requirements regarding deadlines for filing financial statements, except for some regulated industries, such as banks, gambling operators and those who have concession agreements with the Government of Macao.
Commercial law of Macao allows companies to end their financial year on 31 March, 30 June, 30 September or 31 December. However, the Regulation of Supplementary Tax of Macao requires preparation of documents based on the calendar year, i.e. from 1 January to 31 December.
Annual financial statements must be prepared within 3 months after the end of the financial year and kept for 5 years.
An auditor’s opinion does not allow double reporting (compliance with both IFRS and GAAP of the jurisdiction).
Annual audit is compulsory for offshore companies and must be carried out by a local audit company.
The tax authority is the Financial Services Bureau of Macao.
Payers of the supplementary tax on income are classified into group A and group B based on certain criteria.
1. Classification criteria of group A are as follows:
2. Classification criteria of group B are as follows:
A group A taxpayer must declare their income for the previous year with the Financial Services Bureau of Macao from April to June of every year by filling out form M1 (full version) and subjecting it to reexamination and getting it signed by a CPA of Macao. An auditor’s report is not compulsory since form M1 (full version) already includes operating income / expenses of the company and other information equivalent to the content of an auditor’s report. However, you can also request an auditor’s report to be prepared.
A group B taxpayer must declare their income for the previous year with the Financial Services Bureau of Macao from February to March of every year by filling out form M1 (simplified version). A financial report or auditor’s report is not required.
Payers of professional tax are classified into Group I and Group II based on certain criteria.
For group I taxpayers (persons that service other persons), the employer must present Registration Form (form M/2) on professional tax filled out and signed by the employee and a copy of their identity document within 15 days after the employment begins.
A group I taxpayer (person servicing others and receiving remuneration from more than one employer) must declare remuneration or income for the previous year in an income statement (form M/5) from January to February of every year.
A group II taxpayer (freelancer or professional) must file a business commencement declaration (form M/1) on professional tax before the commencement of business.
A group II taxpayer (freelancer or specialist) who does not have a proper grounding in bookkeeping must declare remuneration or income for the previous year in an income statement (form M/5) from January to February of every year.
A group II taxpayer (freelancer or professional) who has a proper grounding in bookkeeping can put off until 15 April.
From January to February of every year, whether they have employees or not, employers must file with the Financial Services Bureau a Name List of Employees and Casual Workers (form M3/M4) of professional tax group I within the filing period prescribed by law. Remuneration or benefits received by each employee in the previous year must be included in the form.
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