Macau tax system: audit, reporting and optimization of taxation of Macau companies and individuals: VAT, income tax and capital gains
Basic taxes (briefly)
|Corporate tax (in detail)||Income tax is paid at a tax rate of 12%. Profits less than 600,000 MPA are not taxed|
|Capital gains tax. Details|
|Other taxes||Social contributions, Property tax|
International tax agreement
|Belgium, Cape Verde, China, Mozambique, Portugal|
|Argentina, Australia, Denmark, Faroe Islands, Finland, Greenland, Guernsey, Iceland, India, Ireland, Japan, Jamaica, Malta, Norway, Sweden, United Kingdom|
Personal income tax in Macau or the so called professional tax is levied on salaries, service payments and other rewards at progressive rate ranging from 0% to 12%:
Taxpayers are residents and non-residents. But non-residents are not entitled to the MOP 144 00 exemption. Therefore, non-residents are subject to a minimum tax rate of 5%. According to the Macau Professional Tax Law, there is a standard 25% deduction on the taxable income in Macau. There is also a 30% reduction in the Macau professional tax liabilities for income derived in tax year 2013. Together, the effective tax rate for Macau professional tax is below 6.3%. Tax tear coincides with a calendar year. Professional tax is paid by individuals themselves (independent jobs) or by employers quarterly or monthly. For non-residents tax can only be paid by employer monthly.
|Income||Tax Rate Less than 144 000||0% 144 000 – 424 000||7%-11% Above 424 000||12%|
The Macau taxation system is territorial in nature, with tax levied on income (Complimentary Tax) arising in or derived from Macau. Tax rate is progressive ranging from 0% to 12%.
Taxable income includes all kinds of gross income received on the account of a company: realization income, reward, commission for services, dividends, interest and royalty. According to Macau Finance Bureau’s practice, all incomes received from sources in Macau and from foreign countries are taxable if they are not directly exempt by Macanese law. For instance, income received by offshore institution is exempt from taxation.
|Income, МОР||Tax Rate Less than 200 000||0% 200 000 – 300 000||9%% Above 300 000||12%|
Capital gains tax
There is no separate tax for capital gain s in Macau. Dividends are subject to a standard complimentary tax and exempt from taxation if they are paid out from after-tax profit. Dividends obtained from a foreign company are taxable in the period when they were obtained.
There is no Value Added Tax in Macau.
There is no withholding Tax in Macau. However, residents are required to disclose the details of foreign recipients of income, including the name and taxpayer number in its tax return.
Other taxes and duties
|Property Tax||payable by the owner of all residential, commercial, and industrial property at rate of 6% (if the tax value is the property rental value assessed by the MFB), or 10% if the tax value is the actual income. An additional 5% stamp duty is levied on the tax payment. Industrial Tax||levied on all individuals and companies engaged in commercial and industrial activities. Since 2005 till now the tax continues to be exempt. Motor Vehicle Tax||levied on the actual sale price of new vehicles covering automobiles, motorcycles and scooters and on imported vehicles for the private use of the importer or marketing agents, varying between 30% and 55% (motorcycles and scooters, 10% and 30%). Tourism Tax||imposed at the rate of 5% on the bill of the services rendered in Macao by establishments such as hotels, guest houses, restaurants, dancing halls, night clubs, massage and sauna parlors. Restaurants are exempt from the tax for 2013. Franchise Tax||imposed on casinos at rate of 35%. Excise Duty||levied on tobacco, alcohol, fuel and lubricating oils. Social Insurance Contribution||a contribution to Macau social security fund of MOP 45 per month for each employee. An employer is required to make contributions of MOP 30 per quarter for resident employees, and MOP 45 per month for non-resident employees.|
There are various financial and fiscal incentives in Macao for companies. It is encouraged to establish companies in light, non-polluted industries. The priority is given to the activity which will make contribution into modernization of industrial capacities of Macau and diversification of industrial sector. Incentives can be formed by full exemption from taxes (offshore institutes), reduction of various taxes up to 50%. Besides, there is no general or specific anti-avoidance rules in Macau: no transfer pricing, thin capitalization rules, controlled foreign companies or disclosure requirements.
Stamp duty is imposed on most business transactions, including payment of taxes (other than complementary tax and professional tax), income on banking activities and transfers of properties at rate of 1% to 5% depending on type of transaction. Taxpayer is a purchaser or transferee of the property. There is also a Special Stamp Duty which is levied on transactions of residential property, commercial property, offices, and parking space for motor vehicles, purchased on or after 14 June 2011 and resold within two years at rate of 10%-20%. Additional Stamp Duty at an effective tax rate of 10.5% is levied on top of the existing Stamp Duty, on the value of residential property where the property is acquired by a corporation, sole proprietor, or non-resident individual, on or after 27 October 2012.
There is no annual government fee per se, but there is a business registration fee which is due by every business in Macau upon registration. Registration fees include registration fee, notary service payment and stamp duty. Amount of registration fees depends on amount of capital.
Foreign exchange control
There is no control over currency exchange operations in Macau, but it is required to have 40% of all payments for export to be in national currency (i.e. the bank converts currency upon receipt).
Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:
- Incorporation information (registration date, registered address); Information about directors and their resignation; Information about secretaries and their resignation; Information about registered capital, nominal value of shares and amount of issued shares; Information about shareholders and share transfer.
All companies in Macau are obliged to keep financial accounts. Books and records are required to be kept in MOP. Other currencies can be used but amount should be recorded in MOP at the same time. Financial accounts should be submitted to Financial Service Bureau annually. There is no statutory audit requirement under the Commercial Code but certain companies must submit audited financial statement (with capital of MOP 1 million and above or average taxable profits in the past 3 years of more than MOP 500 000). There is no provision for filing of accounts to the Companies Registry. The company can adopt a 12 months accounting year either ended on 31 December, 31 March, 30 June or 30 October.
All taxpayers in Macau are divided into Group A and Group B:
- Group A taxpayers are companies that gave maintained appropriate accounting books and records, with capital of MOP 1 million and above or average taxable profits in the past 3 years of more than MOP 500 000. The filing period for return for Group A is from April to June each year. The tax returns of Group A taxpayers should be certified by accountants or auditors who are registered with the MFB. Group B taxpayers are those who do not meet the criteria mentioned above. Any first time taxpayers will automatically be assigned to Group B, unless they fall within the criteria mentioned above or they apply to be reclassified as Group A taxpayers. The assessable profits of a Group B taxpayer are assessed with reference to various factors (for example, the average profit margin as submitted by other taxpayers in the same industry). The filing period for returns for Group B taxpayers is form February to March each year. Certification of the tax returns by registered accountants or auditors is not required for Group B taxpayers.
Taxes of Macau
|Min. rate for corporate tax||12%|
|Capital gains tax||Regular rate|