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10. INCENTIVES AND SPECIAL REGIMES

Macau already has a low and simple taxation regime, which is an effective incentive to attract investments in the country. As a free port and a separate tariff zone, Macau does not levy any import duties on variety of goods and the Government also does not levy any quantitative restrictions on the transfer of profits. Other general and sector specific incentives are given below.

Investment Incentives

  • Companies engaged in manufacturing industry are eligible for exemption of 50% of complementary tax, certain stamp duty transactions and exemption from property tax, provided capital investment is made in new products or technology, improvement of productivity and for increasing exports of goods to new markets
  • If company’s retained profits are reinvested in installation of new equipment within three financial years, then such reinvested profits are allowed as deduction from taxable profits
  • Companies located on outlying islands of Macau are entitled to 50% reduction in business registration tax (except for offshore banking business)
  • New and existing companies which are into expansion, restructuring or transformation of operations are eligible for 100% exemption from business registration tax

Tourism Incentives

  • Exemption from tourism tax on services of accommodation facilities (not equivalent to a hotel) provided by self-catering flats, inns and guest houses, food and drink establishments, etc.
  • Newly established, innovated or expanded facilities which are approved for tourism purposes are eligible for 100% exemption from tourism tax and business registration tax up to 8 years if provided in the Macau and up to 12 years if provided in outlying islands.
  • Property tax exemption, reduction in stamp duty and accelerated depreciation to qualified touristic facilities.

Offshore Company Incentives

Effective from 1 January 2021, the offshore company regime will be abolished. The existing offshore companies will be converted to onshore companies, provided certain transitional requirements are met, and the operating licenses granted to offshore companies will become invalid.

As a transitional measure, effective from 1 July 2018, income from intellectual property (‘IP’) derived by offshore entities is no longer eligible for CIT exemption. The entities will be required to file complementary tax returns under Group A taxpayer with the Macau Finance Bureau from financial year 2018.

Under the existing offshore regime, companies engaged in offshore commercial business are permitted to conduct various services such as information technology equipment consultant, information technology consultant and programming, data processing, database related activities, back offices activities, research and development activities, tests and technical analysis activities, management and administration of ships and aircraft.

Following incentives are available to an offshore commercial business company:

  • Exemption from complementary tax and business registration fees
  • Exemption from stamp duty on incorporation and various other transactions
  • Non-resident managers and specialist technicians of offshore service business company, authorized to reside in Macau, are eligible for exemption from professional tax for the first three years of their employment in the offshore institution.

Research and Development Incentive

Effective from 1 January 2019, an enhanced 300% tax deduction is available for Group A companies for the first MOP 3 million expenditure incurred on innovation, science and technology and research and development (‘R&D’) projects. Any additional R&D expense is eligible for a 200% tax deduction, subject to an overall limit of MOP 15 million.