Macao provides a level playing field for investors from around the world. At the same time, the series of measures that have been implemented to encourage investment – including the provision of various tax and financial incentives – have gradually made Macao an ideal place for investors.
According to Law No. 1/86/M dated 8th February regarding the Tax Incentives within the Scope of Industrial Policy, tax incentives are offered for investments that are favourable to Macao’s industrial development and cover the following areas:
- Full exemption of urban property tax for properties on Macao Peninsula for a period of up to 10 years, and properties on the islands for a period not exceeding twenty years, applicable solely to income of property leased exclusively for industrial purposes;
- Full exemption of business tax;
- Basic allowance of 50% on corporate income tax;
- For the transfer of properties used exclusively for the operation of industrial activities - including establishments of commercial, administrative and social services - a 50% reduction of stamp duty for property transfer may be available; and
- A 50% reduction of inheritance tax and gift tax for property transfer mentioned above may be available.
SME Assistance Programme
Supporting the development of small and medium-sized enterprises (SMEs) has always been a focal point for the Government’s policy. In 2003, in response to the prevailing socio-economic situation, three enterprise-finance programmes were introduced.
SME Aid Scheme
Under the SME Aid Scheme introduced in May 2003, the Government provided enterprises with interest-free loans to improve business, enhance operating capacity and mitigate the impact of SARS.
During the past few years, Macao’s economy has grown rapidly. To meet the increasing demands arising from development, in November 2006 the scheme was revised, with the maximum amount of financial aid increased from 200,000 patacas to 300,000 patacas. Upon a further revision in February 2009, the maximum amount was increased to 500,000 patacas. In March 2012, another revision increased the maximum amount to 600,000 patacas. In order to help SMEs to expand their business, enhance the capability for operation and competitiveness and to deal with the challenge and opportunities brought by economic adjustment, the scheme was revised in May 2017. For those who have fully repaid the loan, Macao SAR provides second chance for application of the Scheme. The maximum amount of aid per enterprise is MOP 600,000.
Enterprises receiving the loans were primarily engaged in retail, construction and public works, restaurants and hotels, real estate, wholesale, corporate services, and personal services including automobile and motorcycle repair and maintenance, and hair and beauty salons, imports and exports, transportation and warehousing, and travel agencies.
SME Credit Guarantee Scheme
The SME Credit Guarantee Scheme was launched in August 2003. The scheme is designed to assist enterprises obtain bank loans for business development. The Macao SAR Government provides eligible enterprises with credit guarantees of up to 50 per cent of a bank loan of up to 1.5 million patacas. The scheme was revised in June 2009 and May 2017, with the maximum credit guarantee rate raised to 70 per cent, with the maximum credit guarantee amount raised to 4.9 million patacas. Most applicants were from the construction and public works sector, followed by retailing, wholesaling, company services, transportation and travel agencies, Chinese restaurants, and other restaurants and hotels, and imports and exports.
SME Credit Guarantee Scheme Designated for Special Projects
The SME Credit Guarantee Scheme Designated for Special Projects was launched in August 2003. The scheme is designed to finance special projects, so as to support SMEs to develop projects to reform and alter their type of business; to promote and advertise their own brands; to improve quality of their products. On the financing front, the Macao SAR Government will provide eligible enterprises with credit guarantees of up to 100 per cent of a bank loan of up to one million patacas. The scheme was revised in May 2017, special projects to develop new business are included to the scheme.Of the approved cases, most were from retailing, followed by wholesaling, paper, printing and publishing, imports and exports, construction and public works, textiles, garments and leather manufacturing, Chinese restaurants, and other restaurants and hotels, personal services including automobile and motorcycle repair and maintenance, and hair and beauty salons, transportation and warehousing, and travel agencies.
One-Stop Service for Investors
IPIM’s One-Stop Service for Investors provides all-round support and assistance to investors throughout the implementation of an investment project. IPIM appoints dedicated staff to support their investments in Macao – all the way from simple consultation to every administrative procedure involved. In addition, free business matching services are offered via a web-based service platform, business negotiations, project matching, promotional activities and publications, helping investors find the ideal business partner.
The Investment Committee – a liaison body comprising IPIM, the Lands, Public Works and Transport Bureau, Macao Economic Services, Labour Affairs Bureau, Macau Productivity and Technology Transfer Centre (CPTTM), Municipal Affairs Bureau, Financial Services Bureau, Health Bureau, Macao Government Tourism Office, Fire Services Bureau and Environmental Protection Bureau – works closely in assisting in receiving and guiding investors and follows up on all the necessary administrative procedures involved in launching and implementing an investment in Macao. The Investment Committee also appoints dedicated public notaries to handle procedures involved in company set-up and business registration, providing comprehensive services to investors.
Macao’s Offshore Law, Decree-Law No. 58/99/M, has been in effect since 1st November 1999. Tax incentives for operating an offshore service business in Macao include exemption from profit tax, business tax and certain stamp duties. In addition, managers and specialised technicians of the offshore institution who are non-Macao residents but authorised to reside in Macao are exempted from personal income tax for the first three years of their employment in the offshore institution.
Offshore institutions are classified by offshore financial industry (approved and supervised by the Monetary Authority of Macao) and non-financial offshore service industry (approved and supervised by IPIM).
Operations of offshore services in Macao must abide by the following rules: 1. Use only non-Macao currency in their transactions and settlements; 2. Target only non-Macao residents as customers; and 3. Focus only on non-Macao markets.
Offshore businesses are permitted in the following eight categories: 1. IT hardware consultancy; 2. IT consultancy and programming; 3. Data processing; 4. Database-related activities; 5. Administrative and archive/filing support; 6. Research and development; 7. Testing and technical analysis; 8. Operation and management of ships and aircraft; 9. Trade in goods and services between China and Portuguese-speaking Countries.
Law no. 15/2018 "Repeal of the legal regime of the offshore services" has been published in the Official Gazette of the Macao Special Administrative Region on 27-December-2018, which terminates the application of offshore licences, fixes the enforcement date of the repeal of the Offshore Regime, and introduces a number of facilitations, which mainly include that the existing Macao offshore institutions are still entitled to the income tax exemption until 31 December 2020, except for the profits arising from intellectual properties which are under specific regulations.
The "Mainland Factor" in Macao's Economy
Under the principle of ‘One country, two systems’ the Government actively strengthens economic and trade interaction and co-operation with the provinces and cities of Mainland China through appropriate institutions and mechanisms, further developing Macao’s role as a gateway and bridge.
Mainland China and Macao Closer Economic Partnership Arrangement (CEPA)
The Mainland China and Macao Closer Economic Partnership Arrangement (CEPA) is an arrangement between two separate tariff zones of a single country that is similar to a free-trade agreement, in conformity with World Trade Organization (WTO) rules, with the objective of promoting the joint economic prosperity and development of the Mainland and Macao Special Administrative Region.
The Mainland and Macao signed the first phase of the Mainland and Macao Closer Economic Partnership Arrangement (CEPA) on October 17, 2003, which has been implemented comprehensively since January 1, 2004. After that, the two sides signed 10 Supplements to CEPA including the CEPA Agreement between the Mainland and Macao on Achieving Basic Liberalization of Trade in Services in Guangdong, CEPA Agreement on Trade in Services, CEPA Investment Agreement, CEPA Agreement on Economic and Technical Cooperation and CEPA Agreement on Trade in Goods, expanding the contents of the original CEPA and deepening the commitments of the parties.
The CEPA mainly covers the four areas of trade in goods, trade in services, investment and economic and technological cooperation.
Trade in Goods
The Mainland agrees to apply zero tariffs to all goods of Macao origin, starting 2006, except for goods prohibited from import into the Mainland. To enjoy zero tariff treatment, goods of Macao origin exporting to the Mainland must fulfil the rules of origin stipulated under CEPA and to obtain the specific Certificate of Origin (CO) to qualify as ‘Made in Macao.’
The CEPA Agreement on Trade in Goods was signed on December 12, 2018 between the Mainland and Macao. The agreement came into effect on the date of signature and has been officially implemented since January 1, 2019. The Agreement has systematically integrated the relevant provisions in the previous CEPA and its 10 Supplements, and enriched the content of cooperation, including the establishment of the criterion of origin and more flexible methods for determining the origin for all products classified under the Mainland tariff codes, further enhancing the level of customs clearance facilitation for trade in goods, so as to promote the movement of goods between the two places and to foster the continuous development of Macao's manufacturing industry. The Agreement has also established a special chapter for the Guangdong-Hong Kong-Macao Greater Bay Area to implement groundbreaking measures for customs clearance of goods within the Greater Bay Area on a pilot basis with a view to assisting Macao’s business sector to integrate themselves into the national development strategies, so as to join force to promote the development of the Guangdong-Hong Kong-Macao Greater Bay Area.
Trade in Services
On 28th November 2015, the CEPA Agreement on Trade in Services under the CEPA framework was signed in Macao, becoming effective on 1st June 2016. CEPA is the first free trade agreement which liberalises trade in services to the whole of the Mainland with market access provisions for national treatment and the management approach of negative listings.
It also restates the existing liberalisation content under CEPA and its Supplements, signifying full liberalisation of trade in services between the whole of the Mainland and Macao. The number of service sub-sectors from Macao to those national treatments applied under the Agreement is 62, including advertising, photography, conventions, hotels and restaurants, tourist guides, road transportation, and so on. Upon implementation of the Agreement, the Mainland opened up 153 service trade sub-sectors to the Macao services industry, accounting for 95.6 % of the 160 sub-sectors under the WTO Services Sectoral Classification System.
According to the standards of WTO services classification, a basic liberalisation of trade in services has been achieved between the two jurisdictions, with the target of achieving the liberalisation of trade in services in the Mainland for Macao by the end of the National 12th Five-Year Plan period essentially completed.
According to the CEPA Agreement on Trade in Services, for the purpose of investment in the liberalised services sectors by Macao Service Suppliers, the establishment of a company and the change of contract/Articles of Association of a company will be subject to filing administration. The adoption of filing administration will be further extended geographically from Guangdong to the whole of the Mainland, improving the relevant management approach of negative listings, leading to a higher level of investment facilitation for Macao investors wishing to access the Mainland market.
Trade and Investment
The “CEPA Investment Agreement” was signed and came into effect on December 18, 2017, and the measures have been implemented since January 1, 2018. The Agreement comprehensively covers investment access, investment protection and promotion. It is in line with international rules and has the characteristics of the two places. Offering a high level of liberalization and strong protection, it will provide more systematic institutionalized protection for economic and trade exchanges and cooperation between the two places.
In terms of investment access, the “CEPA Investment Agreement” further enhances the level of facilitation of investment liberalization between the two places. Following the “CEPA Agreement on Trade in Services”, the Mainland has once again applied the “Negative List” to Macao in terms of market access in the non-service sectors and ensured that it will continue to grant Macao most favorable treatment in the investment sector. It has also added a number of pragmatic investment facilitation measures. These show that the Mainland continues to maintain its highest level of openness to Macao.
In terms of investment protection, the “CEPA Investment Agreement” provides internationally high-level investment protection treatment for compensation on expropriation and transfer, etc. of investment. Meanwhile, the Mainland and Macao have jointly designed a dispute resolution mechanism in compliance with the principle of “One Country, Two Systems” and the demand for any dispute settlement between the investors and the side where the investments are located. This mechanism includes amicable consultation, complaint coordination, notification and coordination, mediation, judicial means, etc., providing comprehensive and effective institutional arrangements for the remedy and protection of rights and the protection of interests of the investors from the two places.
Economic and Technical Cooperation
The “CEPA Agreement on Economic and Technical Cooperation” which was signed on December 18, 2017 and came into effect immediately, involves comprehensive sorting, classification and summarization of the information related to economic and technical cooperation in the CEPA and its ten Supplements, as well as consideration of the current level and characteristics of the respective economic development of the Mainland and Macao. It highlights Macao's characteristics and adds contents relevant to new areas of cooperation and collaborative activities.
In the CEPA Agreement on Economic and Technical Cooperation, the Chapter “Deepening Cooperation in the Development of Macao as a Commercial and Trade Cooperation Service Platform Between China and PSCs” highlights the facilitation of the building of Macao as the said platform with the support of the Forum Macao for the persistent enhancement of Macao’s international competitiveness in its deepening of the economic and trade cooperation between China and PSCs. On the other hand, the Chapter “Deepening Cooperation in Economic and Trade Areas of the ‘Belt and Road’ Initiative” highlights supporting Macao’s participation in the development of the “Belt and Road” Initiative by adopting the measures of establishing an operational liaison mechanism, smoothening communication channels, providing an exchange platform, jointly participating in productivity cooperation and developing markets along the “Belt and Road”.
The 14 key areas of the “CEPA Agreement on Economic and Technical Cooperation” include tourism, convention and exhibition, traditional Chinese medicine and Chinese medicinal products, finance, electronic commerce, environmental protection, legal and dispute resolution, accounting, culture, innovation and technology, education, small and medium-sized enterprises (SMEs), intellectual property, trademark and branding in response to the Five-Year Development Plan. It highlights the country’s needs and Macao’s strengths, promotes the development of local emerging industries such as its featured finance, convention and exhibition with a priority on convention traditional Chinese medicine, and support Macao to nurture new areas of economic with a view to facilitating the moderately diversified economic development of Macao.
The “CEPA Agreement on Economic and Technical Cooperation” dedicates a chapter to sub-regional economic and trade cooperation. In addition to the joint promotion of the economic and trade cooperation between the Pan-Pearl River Delta Region, Guangdong-Hong Kong-Macao Greater Bay Area and the Pilot Free Trade Zone, it focuses on the support, depending on Macao’s needs, to the development of the Comprehensive Cooperation Demonstration Area between Guangdong and Macao and Jiangsu-Macao Cooperation Parks, on the exploration of a new mode of cooperation between the two places under the “One Country, Two Systems” policy to comprehensively foster mutually beneficial cooperation between the Mainland and Macao and provide a broader prospect for the integration of SMEs and youths of Macao into the national development process.
Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area
China’s Outline of the 13th Five-Year Plan points out the idea to “support Hong Kong and Macao to play an important role in the Pan-Pearl River Delta regional cooperation and promote the construction of a major cooperation platform in the Guangdong-Hong Kong-Macao Greater Bay Area and across provinces”. In 2017, the government work report adopted at the Fifth Session of the Twelfth National People's Congress put forward that “we must promote the deepening cooperation between the Mainland and Hong Kong and Macao, study and formulate the urban agglomeration development plan of Guangdong-Hong Kong-Macao Greater Bay Area, give play to the unique advantages of Hong Kong and Macao and enhance the two cities’ roles in the national economic development and opening up to the outside world”, which indicates that the construction of the urban agglomeration in the Greater Bay Area has become a national development strategy.
In July 2017, under the witness of President Xi Jinping, the National Development and Reform Commission and the governments of Guangdong, Hong Kong and Macao signed the Framework Agreement on Deepening Guangdong-Hong Kong-Macao Cooperation in the Development of the Bay Area in Hong Kong.
On February 18, 2019, China officially announced the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area. The Macao Special Administrative Region is one of the four major cities and its development priorities are to build itself into the World Center of Tourism and Leisure, the Commercial and Trade Co-operation Service Platform between China and Portuguese-speaking Countries, promote moderate and diversified economic development, and build a communication and cooperation base where Chinese culture is the mainstream and multiple cultures co-exist.
Information on Recruitment and Employment
The Labour Affairs Bureau is responsible for promoting employment and ensuring the balance between the demand and supply of manpower resources in the labour market, and for providing free services of job referral and recruitment to residents and companies in Macao. If needed, employers can register at the Bureau and apply for recruitment services. For details, please refer to the Bureau’s website.
Information on All Types of Industrial and Commercial Operation Permits/Licenses
In Macao, apart from the general merchandise retail business, most business activities require the application to business licenses/permits from the relevant government department. For general business licenses/permits, please refer to the relevant information in the Macao SAR Government Portal.
Electronic Declaration of Dutiable Commodities and Tax Rates
Businesses that wish to use the electronic tax reporting service need only apply to the Financial Services Bureau for relevant service accounts, and they can use the electronic method to declare various taxes. Please refer to the Macao SAR Government Portal for the detailed procedures.
At present, the only two types of taxes that must be paid for operating general commercial activities (non-franchises) in Macao are the "Business Tax" and the "Profits Tax". For the calculation of tax rates and tax amounts, please see here. For some of the common tax declaration issues, please refer to the Financial Services Bureau’s website.(only available in Chinese and Portuguese)