AicA | Alliance of Inter-Continental Accountants

Global member - Macau

Hong Kong

Basic Information about Macau

  • It covers a total area of 32.9 square kilometers, comprising of the Macao peninsular, Taipa and Coloane.
  • The total population stood at 670,900, the labor force at 394,600 with an unemployment rate of 1.7% by the end of 2018.
  • The official languages are Chinese and Portuguese. English is also widely used in business and tourism.
  • The mixing of the Chinese and Portuguese cultures and religious traditions

Economic Situation and Business Strengths

  • Macau was formerly a colony of Portugal. Since the handover to China in 1999, Macao has recorded stable economic growth and maintained a low unemployment rate.
  • Macau's gaming industry generated over MOP303 billion (US$37.8 billion) in revenue for the year 2018 which is as large as Las Vegas
  • The nominal GDP is approximately MOP430 billion (US$53.7 billion) for the year 2018. Macau has one of the highest per capita GDPs in the world.
  • Macao has been rated by the World Trade Organization (WTO) as one of the most open trade and investment regimes in the world. It is a free port and an independent tariff zone, with a far-reaching international marketing network and close ties with the Portuguese-speaking countries.
  • Macao maintains trade and economic ties with over 100 countries and regions around the world and is a member of more than 50 international organizations. Business operation principles are in line with international practices, along with simple investment and business procedures.

Infrastructure

  • The Macau International Airport commenced operation in November1995.
  • Three ferry terminals provide cross-border services for passengers travelling between Macao and Hong Kong and Mainland China.
  • Three bridges and a strip of reclaimed land link the Macao peninsula to Taipa and Coloane.
  • The Hong Kong-Zhuhai-Macao Bridge commenced in operations at October 2018, 55 kilometer-long, allowing travelers to take less than 30 minutes to get from the Hong Kong International Airport to Macao.
  • Light Transit System is presently 9.3 kilometers long and has a total of 11 stations and continuing to extend to cover the city.

Tax system

Very low tax and simple taxation system - Macau corporate tax has the annual tax-free income of MOP600,000 (US$75,000) and thereafter at a fixed rate of 12% since 2014. Individual tax is zero if the salary is not over MOP192,000 (US$23,925), 3.284% when the salary is MOP1 million (US$0.1246 million), and 5.998% when the salary is MOP10 million (US$1.246 million), Macau can apply such low taxes due to the significant contribution from the gaming tax which collected 88% of total tax income for the year 2018.

Taxes are charged in Macau on income or profits that are regarded as having a Macau source (referred to as the "territorial source principle") rather than on the basis of residence.

There is no value added tax (VAT), capital gains tax and withholding tax on dividends.

Companies in Macau can distribute dividends before or after tax. If a company distributes dividends after paying corporate tax, there will be no dividend tax on shareholders. Alternatively, a company can distribute dividends before corporate tax by claiming the dividends as expenses. In such circumstance, the shareholders should pay the dividend tax. However, each shareholder will enjoy tax-free income of MOP600,000 (US$75,000) and thereafter at a fixed rate of 12%.

Direct tax includes complementary tax (corporate tax), professional tax (individual tax), property tax and industrial tax. Indirect tax includes stamp duty in respect of certain kinds of documents primarily relating to the sale or lease of immovable property in Macau, tourism tax, vehicle tax and consumption tax on fuel and lubricants, tobacco and alcohol only.