Macau tax system

Introduction

The Macau Tax System is one of the simplest, fairest and transparent tax systems in the world. It is keenly pro-business and has attracted numerous multinational companies and investors. The simplicity of Macau’s taxes combined with its low tax burden, has made it an attractive and viable place to do business.

Types of taxes

In Macau, the main types of taxes are individuals’ income tax, companies’ profits tax and property tax.

Individuals’ Income Tax

Individuals who are ordinarily resident in Macau are taxed on their worldwide income, while non-resident individuals are taxed only on income received from Macau sources.

Income tax is calculated and levied annually on income received or accrued in the tax year that ends on December 31.

Residents file their income tax returns in June each year and must include all income received during the tax year, such as remuneration, employment income, capital gains, rental income and any income received from overseas sources.

Individuals are levied a flat rate of 10% on their taxable income.

Companies’ Profits Tax

Companies in Macau are subject to profits tax at 12%, which is calculated on the basis of the income for the year ending December 31.

Companies must submit their annual tax returns to the government by the end of April each year.

Property Tax

The Macau government levies annual property tax on residential and commercial properties owned in Macau.

The rate of property taxes for residential properties is 1.5% of the value of the property, while the rate for commercial properties is 3.0%.

Taxation of Capital Gains

Capital gains are treated differently depending on whether the individual is ordinarily resident in Macau or not.

Ordinarily resident individuals are taxed at the same rate as income earned in the normal course of business. Non-resident individuals are only taxed on any capital gains derived from Macau sources, such as property and share sales.

The capital gains tax rate is 10%.

Tax Incentives

Macau has very attractive tax incentives for both individuals and businesses.

Incentives for Individuals

Individuals who are ordinarily resident in Macau can enjoy personal deductions for medical and educational expenses, foreign language tuition fees and contributions to a Macanese charity.

Incentives for Businesses

Businesses can enjoy tax deductions for certain expenses such as investment in research and development as well as certain types of investments in Macau.

Conclusion

Macau has created a simple, fair and transparent tax system which is largely pro-business, encouraging multinational investors and companies to invest in the region. Tax incentives for individuals and businesses have also made Macau an attractive and viable place to do business.

The Macao taxation system has a long history and is playing an increasingly important role in promoting economic and social development. Its long-standing low taxation control has been the cornerstone in helping the Macao economy grow.

Macao follows a territorial source of taxation system where income gained or earned in Macao are subject to taxation. Generally, there are 3 categories of taxes, namely Personal Income Tax, Profits Tax and Stamp Duty. Other taxes such as betting and pool taxes, inheritance and gift taxes, motor vehicle taxes and real property taxes are also applied.

Under the taxation system, the personal income tax has different tax rates based on the amount of income earned. For non-residents, all chargeable income can be taxed up to a maximum rate of 15%. For residents, the flat rate for all types of incomes is 12%. Profits tax for the current year is levied on a net profit based on a flat 12% rate for all businesses, and a 4% rate for non-profit organizations. The stamp duty is charged on different items such as transfers of property titles and registrations, leasing of immovable property, securities and certain contracts.

The Macao taxation system is a major source of government revenue, contributing to the development of Macao. It has been constantly revised to make it simpler, fairer and more efficient. Regulations are in place to encourage companies and individuals to conduct their financial activities in Macao. The government has also taken some measures such as reduction of profits tax rate to aid those in need and attract new investment.

Overall, the Macao taxation system has helped the stability, progress and prosperity of the Macao economy and society. It provides a stable and reliable taxation source for the country and allows the government to allocate the funds for social reform and improvement measures that benefit the citizens of Macao.