(1) |
Taxpayers Complementary tax is imposed on the total income earned in Macau by individuals or corporations irrespective of where their residence or headquarters are situated, excluding rental income from buildings situated in Macau. The Macau Government borrows its tax filing system from Portugal and classifies all taxpayers into 2 categories namely, Group A and Group B. Most of the taxpayers fall into Group B. The difference between Group A and B taxpayers are as follows:
The main difference between Group A and Group B taxpayers is that Group A taxpayers must establish a sound accounting system and reporting by qualified accountants. The taxable income will be verified according to the declaration documents. Group B taxpayers may not have a complete accounting system and it is not mandatory for reporting by qualified accountants. The taxable income will be assessed by the Tax Assessment Committee. |
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(2) |
Tax rates With effect from 2014, exemption allowance for profit tax assessment has been increased to MOP$600,000. That is, the first MOP$600,000 is tax free and the remaining is subject to Complementary Tax at 12%. Tax rates are as follows:
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(3) |
Taxable Income 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, which is taxed separately under the property tax regime The worldwide income of an individual refers to the income earned after deducting the relevant burden from the income of its industrial and commercial activities. The worldwide income of an enterprise refers to the net profit of the industrial and commercial activities for the whole year calculated in accordance with the related provisions. |
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(4) |
Filing and Payment Regardless whether a business entity is in Group A or Group B, it is required to file an annual tax return with Macau Financial Services Bureau. The annual tax returns must be filed with the Financial Services Bureau by the following dates: (a) Group A taxpayers – 1 April to 30 June (b) Group B taxpayers – 1 February to 31 March Upon receipt of the tax returns, the Financial Services Bureau will issue notice of assessment to those taxpayers demanding the payment of taxes. Normally, payment of tax shall be made by two equal instalments normally in September and November. However, if the amount is not greater than MOP$3,000, payment shall be made by one instalment, normally in September. |
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(5) |
Tax Benefits According to the Budget and the revised Budget for the financial year 2020 approved by the Legislative Assembly (2020 Budget), the tax-free income threshold for complementary tax has been increased from MOP$32,000 to MOP$600,000 for income derived in the tax year 2019. Also, companies, which have already registered as Group A taxpayer in the FSB, will be able to deduct from their taxable revenues 300% of the first MOP$3 million spent on qualifying research and development activities, and 200% of any additional R & D expenditure, subject to a cap of MOP$15 million. The interest on national bonds, local government and central state-owned enterpirse bonds issued in Macau, the proceeds from bond sales and from Portuguese-speaking countries, are exempt from Complementary Tax, but the taxes for relevant proceeds should already be paid in the these countries. The following income are exempted from Complementary Tax:
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(1) |
Taxpayers Professional tax, also known as Salaries Tax or Individual Income Tax, is levied on all personal income arising in or derived from Macau, including salaries, wages, bonuses, commissions, leave pay, value of free accommodation and other prerequisites. Taxpayers are divided in two groups: employees (those employed to render services to third parties in return for compensation on daily or monthly basis) and professional practitioners (those who are self-employed and render professional services, including doctors, accountants and lawyers etc). In the case of employees, all employment income falls within the scope of professional tax, except for items that are not taxable income as required by law. Professional tax is deductible at source and the tax deducted by the employer must be paid to the tax department on a quarterly basis within the prescribed period. |
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(2) |
Tax rates Professional Tax is charged on taxable income (after personal allowance) at rates from 6% to 12%. Tax Table One (Applicable for under 65 years old)
Tax Table Two (Applicable for or over 65 years old/persons with disabilities)
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(3) |
Non-Residents Professional tax is payable by all non-resident specialists, technicians and professionals working in Macau. The amount payable is the same as Macau residents, with a minimum of 5% even if the respective remuneration does not exceed the exempt amount. The tax deducted by the employer must be paid to Macau Financial Services Bureau on a monthly basis within the prescribed period. |
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(4) |
Filing and Payments
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(5) |
Tax Benefits 30% exemption on professional tax and the exemption allowance for its assessment in 2020 is MOP$144,000.00 (refer to “Tax Table One”). In case of the following situation: employer should withhold tax from causal worker whose daily salary is over MOP$686.00 or employee whose monthly salary is over MOP$17,143.00. Please refer to the Simulation Calculation disposal in website of FSB. In addition, exemption allowance for part-time and employee who are aged 65 or above or with permanent disability level of or above 60%, is adjusted to MOP$198,000.00 (refer to “Tax Table Two”). According to “The Budget for the Fiscal Year 2020”, the employers shall deduct 30% of tax payables based on the exemption and deductions when withholding the tax for employees or causal workers. 70% of the Salaries Tax paid for the assessment year 2018 will be refunded to Salaries Taxpayers who hold a Macau Resident Identity Card on 31 December 2018, up to a ceiling of MOP$20,000.00. |
(1) |
Taxpayers of Property Tax The property tax is charged on the revenue derived from all urban houses in Macau, no matter they are being leased or for self-use. In other words, owners of properties located in Macau are liable to Property Tax. |
(2) |
Property Tax Rates For leased houses, their revenues are referred to their amounts of rent use. For non-leased houses, a deduction of up to 10% of the rental income shall be allowed upon request made to Macau Financial Services Bureau to cover the cost of repairs and maintenance incurred by the taxpayer. Property tax is charged at the following rates:
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(3) |
Exemptions Exemptions from property tax include the following situations:
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(4) |
Filing and Payment of Property Tax Within 15 days after a property is leased out, the property owner should file a notice in a specified format and the lease agreement with Macau Financial Services Bureau. Also, the property owner should inform Macau Financial Services Bureau at the termination of the lease agreement. Property tax shall be payable by single payment during the period from June to August every year. |
(5) |
Special Tax Incentives In its 2020 Budget, the Macau Government provided the following special incentives in respect of the property tax:
The urban property tax rate for leased premises is reduced to 8% in Year 2020. |
(1) |
Object of Stamp Duty Stamp duty is a type of tax that levies on deignated documents and behaviours. The taxable items including company establishment, administrative licenses, building sales, document verification, lottery, etc. There are two main collection methods: tax stamp and voucher stamp. |
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(2) |
Rates of Stamp Duty Stamp duty is levied on a variety of documents and transactions executed in Macau. The rates of Stamp Duty charged on transfer of fixed property (such as commercial and residential buildings, factories and parking, etc.) are 1% for first MOP$2,000,000, 2% for the next MOP$2,000,000 to MOP$4,000,000 and 3% for the amount over MOP$4,000.00. While free transfer of property (real estate) or free transfer of assets is subject to 5%. The tax payable shall be the higher of the value declared by the taxpayer or the record value of the property. In addition, for the second residential property, the tax rate is 5% of the taxable amount, the third or above residential property is taxed at 10% of the taxable amount. The tax rates are as follows:
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(3) |
Special and Additional Stamp Duty A Special Stamp Duty at the rates of 20% is charged on the seller if any residential property, commercial property, office and parking space which is sold within one year of purchase. The rate of 10% is charged on the above properties which are sold within 1-2 years of purchase. Also, an Additional Stamp Duty (10%) is levied on top of the existing stamp duty on corporation, sole proprietor and non-resident individual who acquires residential property with or without consideration. |
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(4) |
Special Tax Incentives In the year 2020, the government will continue to exempt stamp duty on insurance contract and banking business, property rights of products, goods and properties, or movabe or immovable properties due to auctions. The admission tickets for performances, exhibitions or entertainment, lecense fees for the posting or place ment of promotional or advertising items are also exempt from stamp duty. Exemption of stamp duty on the first MOP$3,000,000 of fixed asset value which is only applicable for Macau permanent residents, an application form “Confirmation of exemption from stamp duty” should be submitted and confirmed, this is not applicable to the taxpayers who have received such an exemption in previous years or the current financial year. In the situation where two or more people acquire a property, only the eligible taxpayer (the one who does not own any property in the said tax year) is entitled to receive the tax exemption proportionally. Moreover, when a couple acquires an immovable property, they are entitled to receive the relevant tax exemption only when either of them is not the owner of any immovable property. |
Disclaimer All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage. |