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Macau

Why Macau?

Macau is one of the 11 key cities of the Great Bay Area, one of the most developed and populous regions in world occupying over 56.000 square kilometers with around 670 thousand population. It comprises a small narrow peninsula projecting from the mainland province of Guangdong and includes an area comprising the islands of Taipa and Coloane. The countries’ service sector dominates the economy, employing about three-fourths of the total labour force. Macau is a free port, and trade is vital. Much of Macau’s imports consist of raw materials or semifinished goods for manufacturing purposes. Other imports include machinery and apparatuses, and imported petroleum provides most of the power for domestic electric generation. China is Macau’s principal trading partner; trade with the United States and Hong Kong is also significant. In 1991 Macau became a member of the General Agreement on Trade and Tariffs, now the World Trade Organization.

Advantages

Being a Special Administrative Region of China, Macau shares many structural similarities with its close neighbour Hong Kong, yet offers U.S. suppliers a market with distinct characteristics and opportunities.

Enjoys significant autonomy:

Macau maintains a high degree of autonomy except in foreign affairs and defense, and retains its own currency, laws, and border controls. Macau does not use common law, but uses code law patterned on the Portuguese system.

Macau’s huge gaming sector dominates the economy:

Gaming revenues recovered significantly mainly due to gaming capacity increases, attracting visits from recreational gamblers.

Enjoys a Closer Economic Partnership Arrangement (CEPA) with mainland China:

Macau’s 2003 agreement with mainland China – largely parallel to the arrangement Hong Kong enjoys with the mainland has enhanced its economic integration with the PRC.

Market Entry Strategy

Macau and Hong Kong based agents and distributors can increase sales in Macau. Many major gaming and hotel operators in Macau maintain procurement or purchasing offices in Hong Kong.

A very open and business friendly economy

As the 32nd freest economy in the world among 180 economies and 8th in Asia-Pacific region, just behind Hong Kong, Singapore, New Zealand, Australia, Taiwan, South Korea and Malaysia, Macau is an ideal center to establish and conduct business in Asia, particularly with China.

Simple and low taxation system

Macau has a simple and low taxation system (e.g. No taxations on financial gains), a free port policy within a separate customs territory and an efficient legal system conducive to efficient business making.

Simple Tax Regime

Corporate tax

In Macau the complementary tax is imposed on the worldwide income earned by Macau- registered entities, irrespective of where their residence or headquarters are situated and irrespective of the nature of the income. The exception to the foregoing is rental income from leasing of immovable properties located in Macau SAR, which is taxed separately under the property tax regime.

Generally, if a foreign entity is engaged in commercial/industrial activities and/or rendering services in Macau SAR, the resultant gain from such commercial/industrial activities and/or services rendered will be subject to complementary tax.

Complementary tax is imposed on a progressive rate scale ranging:

  • from 3% to 9% for taxable profits below or equal to MOP 300,000; and
  • 12% for taxable profits over MOP 300,000. However, Taxable profits below MOP 32,000 are exempt from tax.

Individual tax

Generally, professional tax is payable by anyone receiving income from employment services performed in Macau SAR or from a Macau employment, irrespective of the following:

  • Where the income was received.
  • The number of days spent in Macau SAR and where the services were performed.
  • Whether the recipient is a resident or not.
  • Whether the recipient is paid in money or in kind. Where income other than cash is received, the Macau Finance Bureau (MFB) may assess the value of benefits so received.

Professional tax rates

For the tax year 2022, the professional tax rates are progressive and cumulative up to a maximum rate of 12%.

However, Foreign freelancers and artists engaged by Macau entities without valid work visas are taxed at the higher of 5% on taxable income and the tax amount arrived by applying the progressive tax rate table on the taxable income.

Macau Companies

Since Macau is a commercial city with a very open economy and advantageous geographic location, many investors have been attracted to invest in Macau,.

There are three major types of company registration in Macau:

Macau Limited Company

This is the most common form of entity chosen by foreigners in Macau and needs to meet the following requirements:

  • At least 1 shareholder;
  • At least 1 officer (same functions as a director);
  • Each shareholder is to receive shares equal to the amount of capital contributed; and
  • Prescribed minimum registered capital is MOP 25,000 ($3,130).

With a Limited Company in Macau the amount of liability is limited to the amount of capital contributed. This type of entity is often used, because there is no limitation on the maximum share capital and you do not need to be a resident of Macau. This type of entity is restricted to a maximum number of 30 shareholders.

The name of a company registered under this type of structure is required to end in “(L.D.A)” which shows it’s a Limited Company. If the company only has 1 shareholder, the name of the company is required to end in “Sociedade Unipessoal Lda.”, which translates to ‘one man limited’

Macau Holdings Limited Company (“S.A.”)

The capital is divided into equal shares and the liabilities of shareholders will be limited to their subscribed shares. Share certificates must be issued. The minimum capital is MOP1,000,000 and the company must have at least 3 directors. It is also mandatory to have:

  1. Board of General Meetings;
  2. Board of Directors; and
  3. Board of Supervisors. Shareholders can also be individual persons or corporations.

Mixed Company

There are 3 kinds of Mixed Liability Companies each with its own requirements, namely:

Mixed Liability Company – at least 1 limited liability partner and 1 unlimited liability partner is required.

Mixed Liability Company by shares – at least 1 limited liability partner and 3 limited liability partners are required. The prescribed minimum registered capital is MOP 1,000,000  ($125,200).

Mixed Holdings Company – at least 1 limited liability partner is required and 1 unlimited liability partner is required. The prescribed minimum registered capital is MOP 1,000,000 ($125,200).

Unlimited Liability Company

For this type of business structure at least 2 shareholders are required and there is no prescribed minimum amount of registered capital. An Unlimited Liability company is required to bear the words (S.N.C).

General Procedures of Company Incorporation

A company is incorporated in Macau by following the below procedures:

  • Applying for the name availability certificate
  • Draft, sign and notarize the company’s Articles of Association
  • Declaration of initiation of activity (M1 Form) to be submitted to the Macau Tax Bureau
  • Application for registration at the Macau Business Registration

It takes around 12 working days for the Macau Business Registration to complete the registration and issue the Company Business Certificate.

The countries’ service sector dominates the economy, employing about three-fourths of the total labour force. Macau is a free port, and trade is vital. Much of Macau’s imports consist of raw materials or semifinished goods for manufacturing purposes.

Author: Chandrawat & Partners

Date: April 2022

Topic: Doing Business in Macau

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