Introduction to Taxation

Government Taxation

  • Macao is a separate customs territory and has a simple and low taxation system. Macao is a free port allowing convenient movement of people, goods and capital, which facilitates foreign investments in Macao and the development of local enterprises.
  • The Financial Services Bureau (DSF) is responsible for monitoring the taxation system and implementing the tax law. The fiscal year runs from January to December.

 

The Main Taxes in Force in Macao SAR are:

Profits tax (3% to 12%)

Profits tax is levied on all income derived from commercial activities in Macao by natural persons and legal persons (including all types of companies, branches, natural person proprietor and partnership, but excluding the legal person of recognised charitable organisations and religious entities).

Profits Tax is taxed at progressive rates. Taxable income below MOP 32,000 is exempted from tax. Taxable profits between MOP 32,001 and MOP 300,000 are taxed from 3% to 9%. Taxable profits exceeding MOP 300,000 are taxed at a flat rate of 12%.

2021 Tax Relief Measures

(According to Law no. 27/2020 – the Government Budget of Financial Year 2021, as amended by Article 3 of Law no. 3/2021, same below)

  • Allowance for profits tax assessment in 2020 is MOP 600,000, with an additional deduction of up to MOP 300,000 for profits tax payable.
  • For companies which have already registered as Group A taxpayer in DSF, the tax levied on taxable income derived from the first MOP 3 million spent on research and development activities will be deducted by 300% of the spent amount; and the tax levied on taxable income generated from cost exceeding MOP 3 million spent on the same activities will be deducted by 200% of the spent amount. The total deduction is subject to an upper cap of MOP 15 million.
  • In 2021, all income obtained or generated in Portuguese-speaking countries are exempt from Profits Tax, on the condition that the relevant profits tax have been paid in that countries.
  • Interest obtained from bonds which are issued in the Macao SAR, as well as profits obtained from the purchase and sale, redemption or other availability, are exempt from the profits tax in 2021.

 

 

Business Registration Tax (MOP 300 for most activities, MOP 1,500 for import and export industry)

Natural persons or legal persons engaging in any commercial activities must complete business tax registration and pay the business tax, whose amount is subject to the nature of business. Most activities are taxed MOP 300 annually. For commercial banks, the tax is MOP 80,000 with an additional 5% stamp duty.

2021 Tax Relief Measures

Exemption of business registration tax.

 

Salaries Tax (7% to 12%)

Salaries tax is imposed on work income from employment or self-employment. Work income refers to all regular or occasional, fixed or additional remuneration, regardless of form (money or tangible object), source, location, calculation method, payment method or currency. Salaries Tax is calculated at progressive rates up to a maximum of 12%.

Salaries taxpayers are divided into two groups – employees (including casual workers and part-timers) and self-employed professionals (freelancers). Incomes meeting the descriptions stipulated in Article 4 of the Salaries Tax Law are not taxable.

In accordance with Paragraph 2 under Article 36 of the Salaries Tax Regulations, a minimum of 5% salaries tax will be levied on non-local artists, orators, scientists, technicians and specialised workers who work in Macao for a short period of time, in accordance with the tax rates stated in Article 7 of the Salaries Tax Regulations, even if their income does not exceed the amount deemed exempted.

2021 Tax Relief Measures

  • In 2021, the exemption on salaries tax is 30 % and the allowance for its assessment is MOP 144,000. Employers should withhold tax from causal workers whose salary is over MOP 640/day or MOP 16,000/month. In addition, allowance for part-timers and employees who are aged 65 or above or with permanent disability level of 60% or above is adjusted to MOP 198,000.
  • 70% of the salaries tax paid for the assessment year 2019 will be refunded to salaries taxpayers who hold a Macao Resident Identity Card on 31 December 2019, up to a ceiling of MOP 20,000.

 

 

Property Tax (6% or 10%)

Property tax is levied on all owners of residential, commercial and industrial properties in Macao. The tax payable for each year of assessment is the rental value of the property assessed by the Standing Committee of Property Assessment or the actual rental income generated; whichever is higher and the applicable tax rate will be 6% or 10% respectively.

2021 Tax Relief Measures

  • Standard deduction of MOP 3,500 on property tax. If the taxpayer is two natural persons (individuals) or more, its property tax can be deducted by the aforementioned amount as long as one of them is a permanent resident of Macao SAR. If the taxpayer is a legal person, natural person proprietor or non-local resident of Macao SAR, such deduction is not applicable.
  • The urban property tax rate for leased premises is reduced to 8%.

 

Consumption Tax

A fixed consumption tax (excise duty) is levied on certain goods, including alcoholic beverages and tobacco. The products specified below are subject to the same consumption tax as products produced in Macao:

Products

Specific rates

(MOP/unit)

Ad value rates

(c.i.f. value) (%)

Wine, beer and other alcoholic beverages
Alcoholic beverages with an alcohol content of 30% (20°) or above by volume (excluding rice wine)20.00/litre10%
Tobacco
Cigars, cheroots and cigarillos4,326.00/kg
Cigarettes; other1.50/unit
Other products containing tobacco or tobacco substitutes, or other compounds added to the tobacco600.00/kg

 

 

Motor Vehicle Tax

The natural persons or legal persons engaging in the following activities that involve new motor vehicles (including vehicles, motorcycles and scooters) are subject to the motor vehicle tax:

  1. Transferring new motor vehicle(s) to consumer(s) in Macao.
  2. Imports new motor vehicle(s) for personal use
  3. Participating in the business cycle of the new motor vehicles, particularly the sellers, importers or exporters, and those who appropriate new motor vehicle(s) for personal use.

 

 

Stamp Duty

In the Macao SAR, most business transactions are subject to a stamp duty, including taxes payable according to laws and regulations (except for profits tax and salaries tax). Income generated from banking, insurance and advertising activities and property conveyance are also subject to stamp duty in addition to a 5% Stamp Duty on Payment Slip. Furthermore, legal persons, natural person proprietors or non-local residents who acquire any immovable residential property or its rights by compensated or uncompensated means are subject to an additional 10% of stamp duty.

In response to the social and economic development and in view of the popularisation of electronic payments, Law no. 24/2020 (Amendments to the Stamp Duty Regulation and the General Table of Payment of Stamp Duty) was brought into effect on 31 March 2021. The amendments mainly include: replacement of the revenue stamp with the Stamp Duty on Payment Slip, removal of certain stamp duty items in the original General Table of Payment of Stamp Duty, imposition of stamp duty on contracts for right transfers for stores in commercial centres, 50% stamp duty reduction for lease contracts where the disputes on leasing of immovable property are solved through arbitration; rebates for part of the paid stamp duty in the event of early termination of the leasing contract of immovable property; increased costs for failing to perform tax obligations to combat and reduce tax evasion.

Stamp duty for the purchase of immovable property (such as composite buildings, office buildings and parking spaces) is calculated at a progressive rate:

2021 Tax Relief Measures

  • Exemption of stamp duty on insurance contracts and banking services.
  • Exemption from stamp duty on auctions of products, goods and properties, or movable or immovable properties.
  • Exemption of stamp duty on all admissions of performance, exhibition or any kind of entertainment, including the stamp duty levied upon exiting the events.
  • The issuance, purchase and sale, as well as compensated transferral of bonds are exempt from the applicable stamp duty.
  • Exemption of stamp duty on putting up or placement of advertisements, signboards and publicity materials that have already been exempt from the license fee.

Assessment scope

Assessment scopeStamp Duty Rate
First MOP2,000,0001%
MOP2,000,01 to 4,000,0002%
MOP4,000,001 or above3%

 

 

Tourism Tax (5%)

In accordance with Decree Law no. 16/96/M of 1 April (Legal Regime of Hotel Industry and Similar Industries), a tourism tax of 5% is imposed on hotels and similar establishments (hotels, guest houses, tourism complexes, restaurants, cabarets, bars) and health clubs, saunas, massage parlours and karaoke lounges according to the price of services. (The ancillary services such as telecommunications and laundries, as well as service charges up to 10%, are not subject to Tourism Tax)

2021 Tax Relief Measures

Exemption of tourism tax on the services provided by luxury, Class 1 and Class 2 restaurants in Group 1 classification indicated in Article 6, and also on proprietary business activities provided by similar establishments in Group 1 classification of Group 1, 2 and 3 indicated in Article 5 of Decree-Law no. 16/96/M.

From 11 May to 31 December 2021, tourism tax is exempted for the following establishments:
Hotel establishments in Group 1, 2 and 3 stipulated in Article 5, luxury and Class 1 night clubs and bars in Group 2 and 3 stipulated in Article 6 of Decree-Law no.16/96/M; and gyms, saunas, massage parlours and karaoke lounges indicated in Paragraph 1(b) of Article 1 of the Tourism Tax Regulation. Monthly submission of the Tax Payment Slip M/7 is still required.

More details about taxation are available on the Guide of Formalities of Tributary on the official website of the Financial Services Bureau of Macao

Website:
http://www.dsf.gov.mo/guia/guia.aspx

 

Taxation Agreements and Arrangements

In regard to co-operation in taxation and investment, Macao has already signed a number of co-operation documents with other regions, including the Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, Tax information Exchange Agreement, and Agreement on Encouragement and Reciprocal Protection of Investments.

Regional Agreements and Arrangements
Arrangement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on IncomeMainland China
Arrangement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on IncomeHong Kong, China
International Agreements and Arrangements
Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on IncomePortugal, Belgium, Mozambique, Cape Verde, Vietnam and Cambodia
Tax information Exchange AgreementAustralia, Denmark, Faroe Islands, Finland, Greenland, Iceland, Norway, Sweden, India, Jamaica, Malta, Japan, the United Kingdom, Guernsey, Argentina and Ireland
Agreements on Promoting and Protecting Investments
Agreements on Encouragement and Reciprocal Protection of InvestmentsPortugal and the Netherlands