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.
Subsidy Scheme for Encouraging Enterprise Upgrading and Development
The implementation of the Subsidy Scheme for Encouraging Enterprise Upgrading and Development aims to encourage business owners to enhance their enterprises’ competitiveness, facilitate moderately diversified and sustainable economic development. It has been put into effect on 16 March 2021, interest or rental subsidy is offered to eligible business owners who, by means of bank loan or financial leasing, carry out investment projects in the Macao SAR that benefit the achievement of the aim of this scheme, with a maximum subsidy period of 4 years.
The maximum annual subsidy rate, the maximum limit of total loan/rental amount eligible for subsidy each year of this subsidy scheme are subject to determination by Chief Executive’s Decision published in the Official Gazette of the Macao SAR. According to Chief Executive’s Decision No. 39/2021, the current maximum annual subsidy rate/amount is shown as follows:
Loan Interest Subsidy: the maximum annual subsidy rate for loan interest subsidy is 4%, the maximum total loan amount eligible for subsidy each year is MOP 600,000,000.00, and the maximum amount of loan eligible for subsidy each year for each beneficiary is MOP 10,000,000.00.
Financial Lease Rental Subsidy: the maximum annual subsidy rate for financial lease rental subsidy is 4%, the maximum total financial lease rental amount eligible for subsidy each year is MOP 200,000,000.00, and the maximum financial lease rental amount eligible for subsidy each year for each beneficiary is MOP 10,000,000.00.
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
In May 2003, Macao SAR introduced SME Aid Scheme to provide enterprises with interest-free loans to improve business, enhance operating capacity and mitigate the impact of SARS.
to cope with the rapid economic development in Macao, Macao SAR revised the legal regime of SME Aid Scheme in 2006, 2009, 2012 and 2017 respectively, with the maximum amount of financial aid increased to MOP 600,000 and the use of the financial aid was relaxed. For those who have full repayment of the assistance granted under the SME Aid Scheme and the Youth Entrepreneurs Aid Scheme, as well as appropriate operating conditions and good repayment records, the Macao SAR provides second chance for application of the Scheme. The maximum amount of aid per enterprise is MOP 600,000.
In coping with the economic impact of COVID 2019, the program was amended in March 2020, SMEs which has been registered for a year are eligible to apply. Enterprises receiving the loans were primarily engaged in retail, construction and public works, restaurants and hotels, wholesale, corporate services, and personal services including automobile and motorcycle repair and maintenance, and hair and beauty salons, transportation and warehousing, travel agencies and imports and exports.
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 supports investors by appointing dedicated personnel to provide all-round support and assistance including – providing business information of Macao, handling company registration procedures, licenses application, information and recommendations on taxation and legal issues, offering investors a more convenient way to handle their business and saving time in dealing with administrative procedures. Meanwhile, the Investment Committee – a liaison body comprising 13 government departments and organizations (including IPIM, Municipal Affairs Bureau, Economic and Technological Development Bureau, Financial Services Bureau, Labour Affairs Bureau, Macao Government Tourism Office, the Lands, Public Works and Transport Bureau, the Monetary Authority of Macao, Health Bureau, Fire Services Bureau, Pharmaceutical Administration Bureau, Environmental Protection Bureau and Macau Productivity and Technology Transfer Centre), assists in the administrative procedure of launching and implementing the investment project and giving specific guidance to investors.
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. On November 20, 2019, the Government of the Macao Special Administrative Region and the Ministry of Commerce signed the Amendment Agreement to lower the market access thresholds in the Mainland, reduce restriction measures for Macao services suppliers for more participation in the development of the Mainland market. In addition, the Amendment Agreement introduces some liberalisation measures for pilot implementation in the Guangdong-Hong Kong-Macao Greater Bay Area. The Amendment Agreement will be effective from 1st June 2020.
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.
In order to further promote the closer cooperation between the Mainland and Macao, enhance the level of liberalization on trade in services, foster moderate diversification of Macao’s economy, The Agreement Concerning Amendment to the CEPA Agreement on Trade in Services was signed by on 20 November 2019 by the government of the Mainland and Macao, which entered effect on 1 June 2020.
The Agreement Concerning Amendment to the CEPA Agreement on Trade in Services systematically consolidates and sums up the previous liberalization measures relating to trade in services in the CEPA series of agreements, and integrates and expands the scope of liberalization in response to the current changes in the international economic environment, the Mainland’s investment policy trend, and the progress of economic and trade cooperation between the two places. The services sectors covered mainly include finance, legal, accounting, construction and engineering, telecommunications, cultural, tourism, distribution and education services, among others. At the same time, the original positive lists for telecommunication and cultural services are deleted, with their contents incorporated in the negative list for commercial presence and the positive list for liberalization measures under cross-border services. The Agreement proposes a number of service liberalization measures that will be implemented on a pilot basis in the Guangdong-Hong Kong-Macao Greater Bay Area to support and encourage different sectors of Macao to participate in the development of the Guangdong-Hong Kong-Macao Greater Bay Area, assisting the moderate diversification of Macao’s economy.
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)