Macau Individual Tax Guide

Macau

Macau

EY

17/F, 39 Avenida de Almeida Ribeiro Macau SAR

Executive contacts

Paul Wen +852 2629-3876 (resident in Hong Kong)

Fax: +852 2118-4025

Email: paul.wen@hk.ey.com

Ana Cheong +853 8506-1815 (resident in Macau)

Fax: +853 2878-7768

Email: ana.cheong@mo.ey.com

Immigration contact

Helma Choi +853 8506-1823 (resident in Macau)

Fax: +853 2878-7768

Email: helma.choi@mo.ey.com

This chapter relates to the tax jurisdiction of the Macau Special Administrative Region (SAR) of China.

As a result of a general lack of tax practice and precedent, several unre solved tax issues exist in Macau.

A. Income tax

Who is liable. Individuals are subject to tax on income arising in or derived from Macau. Macau observes a territorial basis of taxa tion. Consequently, the concept of tax residency has no signifi cance in determining tax liability, except in limited circumstances.

Income subject to tax. Professional tax is imposed on employment and self-employment income arising in Macau. Comple mentary tax is imposed on business income arising in Macau.

Employment income. Income from employment is subject to pro fessional tax. For purposes of the tax, taxpayers are divided into employees and professional practitioners (see Self-employment and business income).

In general, all income from employment, including benefits in kind and directors’ fees, is subject to professional tax.

Self-employment and business income. Professional practitioners are subject to tax on self-employment income. Sole proprietors are subject to tax on business income.

Rental income. Property tax is levied annually on the owners of real property in Macau. Actual rental income derived from real property is taxed at a rate of 8%. For property that is not rented, the tax is levied at a rate of 6% on the deemed rental value of the property as assessed by the Macau Finance Department. A de duction, by application for rental property, of up to 10% of the rent or rental value of the property is allowed for repairs, mainte nance and other expenses.

For 2021, a property tax deduction of up to MOP3,500 is granted for each property unit for Macau residents only.

Exemptions are available under certain circumstances. Exempt income. Employers’ contributions to medical and related schemes and to approved pension schemes are not included in taxable income.

Taxation of employer-provided stock options and share awards. Stock options granted by employers with respect to employees’ services in Macau are subject to professional tax. The stock options gains are subject to tax in Macau in the year in which the individual exercises the option. The taxable stock option amount is calculated as follows:

Taxable stock option income = (market value on exercise date – option price) x number of shares exercised

Share awards granted by employers with respect to employees’ services in Macau are subject to professional tax. The share awards gains are subject to tax in Macau in the year in which the share award vests to the individual. The taxable share award amount is calculated as follows:

Taxable share award income = (market value on vesting date –consideration for share awards) x number of shares vested

Employers are required to notify the Macau tax authorities within 30 days after granting stock options or share awards.

Capital gains. Macau does not levy capital gains tax.

However, the Macau Complementary Tax Law does not distin guish a “capital gain” from a “revenue profit.” Sole proprietor ships and companies carrying on commercial or industrial activities in Macau are subject to complementary tax on their capital gains derived in Macau.

Purchasers of real property must pay stamp duty, which is levied on the sales price or assessable value of the property at the rates listed in the following table.

For 2021, a first-time purchase of residential property by a Macau permanent resident for a cost of up to MOP3 million is exempt from stamp duty.

Additional stamp duty is charged under certain circumstances.

A 25% exemption and a personal allowance of MOP144,000 may be deducted from employment income. Starting from the 2019 tax year, the personal allowance is increased to MOP198,000 for part-time employees, employees who are aged 65 or above, or with a permanent disability level of 60% or higher.

Rates. Professional tax rates are set forth in the following table and apply to both residents and nonresidents.

Taxable income Tax rate Tax due Cumulative tax due MOP % MOP MOP

First 144,000

Next 20,000

Next 20,000

Next 40,000

Next 80,000

Next 120,000

Remainder

1,400 1,400

1,600 3,000

3,600 6,600

8,000 14,600

13,200 27,800

Tax rebate. For 2021, an additional 30% relief is granted on the total amount of tax payable.

Relief for losses. Employees may not carry back or carry forward losses. However, an individual carrying on a business as a sole pro prietor may carry forward and deduct losses from assessable profits in the following three years if he or she is a Group A taxpayer subject to Macau complementary tax or a professional practitioner with proper accounting records who is subject to Macau professional tax.

B. Estate and gift taxes

Effective from 1 August 2001, estate and gift taxes were abol ished.

C. Social security

Employers must contribute monthly to a government social secu rity fund in the amounts of MOP60 for every resident worker and MOP200 for every nonresident worker. Resident workers must each contribute MOP30 per month. No ceiling applies to the amount of wages subject to social security contributions. Macau has not entered into any social security totalization agree ments with other jurisdictions.

D. Tax filing and payment procedures

Tax is levied on income arising in or derived from Macau during the calendar year.

Employers in Macau must withhold professional tax at the rates set forth in Rates from salaries paid to employees. In addition, employers must withhold professional tax at a rate of at least 5% from amounts paid to nonresidents without work permits. Pro fessional tax collected by employers must be remitted quarterly under Article 32 of the Professional Tax Regulations and/or monthly under Article 36 of the regulations to the Macau Finance Department. Employers in Macau must prepare and submit annual tax returns with respect to salaries paid to residents and nonresidents and the professional tax withheld.

E. Double tax relief and tax treaties

Macau has entered into double tax treaties with Cape Verde, China Mainland, the Hong Kong SAR, Mozambique, Portugal and Vietnam. Macau has also signed tax treaties with Belgium and Cambodia, but these treaties are not yet in force.

F. Visitor visas

All travelers entering Macau must hold valid passports or other equivalent travel documents. Nationals from the jurisdictions listed below do not require a visa to visit. The length of time one is permitted to stay in Macau under visitor status depends on the jurisdiction that issued the passport.

Albania Grenada Netherlands

Andorra Hungary New Zealand

Argentina Iceland North Macedonia

Armenia India Norway Australia Indonesia Philippines

Austria Ireland Poland

Belarus Israel Portugal Belgium Italy Romania

Bosnia and Japan Russian Federation

Herzegovina Kiribati Samoa

Brazil Korea (South) San Marino

Brunei Latvia Serbia Bulgaria Lebanon Seychelles

Canada Liechtenstein Singapore Cape Verde Lithuania Slovak Republic Chile Luxembourg Slovenia

Croatia Malaysia South Africa

Cyprus Mali Spain Czech Republic Malta Sweden Denmark Mauritius Switzerland Dominica Mexico Tanzania

Ecuador Moldova Thailand Egypt Monaco Turkey

Estonia Mongolia United Arab Emirates Finland Montenegro United Kingdom France Morocco United States Germany Namibia Uruguay Greece

Residents of the Hong Kong SAR may stay in Macau for up to one year without a visa.

Nationals from jurisdictions other than those listed above (how ever, see the last sentence of this paragraph) may obtain visitor visas on arrival in Macau at the cost of MOP100 for an adult, MOP50 for a child under 12 years of age, MOP200 for family groups and MOP50 per person for tourist groups of 10 or more. These individuals may stay in Macau for 30 days. Visitors from Bangladesh, Nepal, Nigeria, Pakistan, Sri Lanka and Vietnam are required to apply for a Macau visa in advance through a Chinese embassy or consulate.

Foreign nationals staying in Macau under visitor status may not engage in any form of employment in Macau, except for those who qualify for an exemption (see Section G).

G. Work permits

Before a Non-resident Worker’s Identification Card (blue card) is granted by the Immigration Department, a work permit must be obtained from the Macau Labour Affairs Bureau (Direcção dos

Serviços para os Assuntos Laborais, or DSAL), the government authority that handles the employment of foreign nationals and local workers.

Before a work permit application is made to the DSAL, the em ployer must register the vacant position with the employment section of the DSAL and must indicate the identity of the employer, title of the position, remuneration, working hours, and qualifications and experience required. Vacancy order forms are available in the DSAL’s employment section. An employer that is unable to find a local employee with comparable experience and qualifications to fill a vacancy may apply for a work permit to bring in a qualified nonresident. The employer must prove that the DSAL was notified of the vacant position and was unable to provide a prospective employee.

To obtain work permits from the DSAL for their foreign employ ees, employers must generally submit the following documents to the DSAL:

• A prescribed application form completed in full with details of the employer, reason for employing the foreign national, and number and positions of existing resident and nonresident employees

• Photocopy of the employer’s commercial registration document from the Identification Services Bureau and photocopy of the legal representative’s identity card

• Photocopies of the employer’s business license, industrial reg istration or equivalent registration document, and business tax payment record

• Evidence of the employer’s contribution to the Social Security Fund

• Photocopy of proof for local recruitment from the DSAL

• Photocopy of the foreign employee’s passport or other travel document

• Evidence of the foreign employee’s qualification and experience

If an application is approved by the DSAL, a letter of approval is issued to the applicant for submission to the Immigration Department to process the foreign employee’s blue card. A for eign national may not undertake employment in Macau until a blue card application is submitted. The work permit and blue card are normally granted for employment with a specific employer.

Applying for a work permit in Macau may be a lengthy process. Applications are considered on a case-by-case basis. In general, it takes approximately three to six months to obtain the work permit after all the required documents have been submitted. No fee is charged for the granting or renewal of a work permit. A fee of MOP100 is charged for the granting and renewal of a blue card.

Work permits are normally granted for a maximum period of two years and are renewable by the DSAL. The application form for the renewal of a work permit, together with other required docu ments, must be submitted to the DSAL three months before the expiration date of the work permit. The applicant must also apply for renewal of a blue card from the Immigration Department when the work permit is renewed by the DSAL.

An expatriate who wants to work in Macau is exempt from the work permit requirements if either of the following circumstances exist:

• An enterprise with a registered office located outside of Macau and an enterprise with a registered office in Macau enter into an agreement with respect to the performance of specified or occasional guidance, technical, quality control or supervisory duties.

• An individual or collective person with a registered office in Macau invites a nonresident to engage in religious, sports, aca demic, cultural interchange or artistic activities.

The above work permit exemptions are limited to a maximum period of 45 consecutive or non-consecutive days in each period of six months. The calculation of the work permit exemption period begins from the date of the entry of the nonresident into Macau. The dates of the expatriate’s work in Macau should be recorded in documents.

Foreigners who enter Macau to set up their own businesses are also required to obtain a work permit to work in Macau. They must follow the procedures for recruiting nonresident workers and submit the following documents:

• Copy of the applicant’s identification document

• Copy of the latest Business Tax Registration or Declaration of Start/Alteration of Activity Form M/1

• Proof of the activities performed by the applicant, such as aca demic certificates or work reference letters

• Proof of applicant’s economic capacity in Macau

• Copy of the contributions to the Social Security Fund

• Personal information of recruited local workers, including posi tions, remuneration and identity documents

H. Residence permits

The government’s policy is to encourage people of financial standing, who will make substantial investment in the territory, to become residents of Macau. To qualify, an applicant must dem onstrate his or her financial ability to invest significantly in an enterprise in Macau. Management and/or technical personnel employed or likely employed by a Macau-registered company with qualifications and professional experience that contribute to Macau’s economy may also be granted a residence permit on application.

Foreign nationals applying for residence permits must have the prior approval of the Macau Trade and Investment Promotion Institute (Instituto de Promoção do Comércio e do Investimento de Macau, or IPIM). To obtain this approval, the applicant must file with the IPIM an application describing all pertinent infor mation relating to the investment or the foreign national’s quali fication and experience. An appointment must be made with the IPIM to submit the required documents. After all the required documents have been submitted, the IPIM generally takes more than one year to process the application.

If the IPIM is satisfied that all prerequisites for the grant of a residence permit are fulfilled, the applicant must go to the Immigration Department of the Public Security Police Force with

the Approval Notification of Residence Authorization issued by IPIM to apply for the Receipt of Residence Authorization (Residence Receipt). The issuance of the Residence Receipt takes approximately seven working days. After obtaining the Residence Receipt, the applicant can go to the Identification Bureau of Macau to apply for a Macau Non-permanent Resident Identity Card. This process generally takes 15 working days.

The temporary residence permit is normally granted for an initial period of three years, depending on the validity of the applicant’s travel document. A residence permit expires 30 days before the expiration of an applicant’s travel document.

Temporary residence permits may be extended on application by the permit holders. An application for renewal, together with all documents required, must be submitted to the IPIM for endorse ment within 90 days before the expiration date of the temporary residence permit. The granting or renewal of a temporary resi dence permit is not subject to any fees by the issuing authorities.

In general, a temporary residence permit holder may, after seven years of continuous residence in Macau, apply for permanent residence status.

The Macau SAR government has suspended the application for a residence permit based on an investment in real estate until fur ther notice.

I. Family and personal considerations

Family members. In general, foreign nationals who hold blue cards or residence permits may be accompanied to Macau by their family members on application. Family members include a spouse, children and parents that are financially supported by the applicant. Unskilled workers may not have dependents accom pany them to Macau. Accompanying family members are nor mally permitted to stay in Macau for the duration of their family member’s work permit or residence permit.

Driver’s permits. Foreign nationals may drive legally using their home jurisdiction driver’s licenses if they hold valid international driving permits. Foreign nationals must register their licenses with the Public Security Police Force if they stay in Macau for more than 14 days. Temporary driver’s permits may be obtained by pre senting the Public Security Police Force with the foreign nationals’ passports or equivalent travel documents, foreign driver’s licenses and international driving permits. Temporary driver’s permits are generally valid for six months and may be renewed on request. No fee is charged for the issuance or renewal of the permits.

From the date that a foreign national resides in Macau or within one year from the date of his or her first arrival in Macau, a for eign national may apply to exchange his or her foreign driver’s license for a Macau driver’s license. Foreign driver’s licenses issued by certain jurisdictions may be accepted on a reciprocal basis. Macau licensing authorities normally recognize foreign licenses issued by jurisdictions with requirements comparable to those of Macau (passing a practical driving test is essential).

To exchange a foreign license for a Macau one, the applicant must submit the following documents in person or through the person authorized by the applicant to the Transport Bureau:

• Completed prescribed application forms (Form 3A and Form 011/DLC).

• Original and two copies of the applicant’s valid foreign driver’s license. An official translation of the license into Chinese or Portuguese must be included if the license is in a language other than Chinese, Portuguese, English or French.

• Originals and photocopies of the applicant’s Macau SAR Resident Identity Card.

• Medical certificates completed by a local registered medical practitioner confirming the applicant’s mental and physical capability of driving.

• Two 1.5-inch recent color photos (with white background).

• Application fee of MOP2,000. An additional fee for urgent pick up is MOP400.

Holders of Korea (South), Philippines and Taiwan driver’s licenses are required to submit proof of stay for at least six months in the related jurisdictions.

In general, the Transport Bureau takes about two to six months to process and approve the application. An “urgent service” application is completed within six working days after receipt.