Macau SAR

Corporate - Deductions

Last reviewed - 06 June 2024

Please note that the assessor is empowered to disallow any business expenses (e.g. entertainment, travelling) where the amount incurred is considered to be excessive.


An initial allowance of 20% is granted on buildings. The rates of tax depreciation are detailed in Decree-Law No.4/90/M, dated 5 March 1990. The Decree-Law prescribes the maximum annual tax depreciation rates and the number of years of asset life for different asset classes under the straight-line method. For illustration, the maximum depreciation rates and the maximum useful life currently applicable to the general types of assets are set out below:

Assets Maximum annual percentage rate (%) Maximum number of years
Industrial buildings 4 50
Office and residential buildings 2 100
Machinery and installations, air conditioning, elevators, equipment 10 to 20 20 to 10
Tools 20 to 33.3 10 to 6
Laboratory, telex and interior telephone equipment, furniture, filing systems, typewriters, and accounting machines 16.66 to 25 12 to 8
Computer hardware 25 8
Office installations 14.29 14
Trucks 14.29 14
Automobiles 20 10
Intangible assets, pre-operating expenses incurred prior to commencement of business 33.33 6
Deferred expenses arising in connection with increases in share capital, changes in form of business enterprises, issuance of debentures, marketing and other studies, and financial expenses incurred for the acquisition or own production of fixed assets prior to completion 33.33 6
Patents 10 20
Manufacturing licences, concessionary agreements, and similar rights * *
Trademark * *

* At the discretion of the authorities.

In the case of commercial and industrial buildings, depreciation is not allowed for the value attributable to the cost of the freehold land. Where the value of the freehold land cannot be determined from the total cost of land and buildings, a portion equal to 20% is deemed to be attributable to the land value for the purpose of determining the value of buildings to be depreciated.

Depreciation can be claimed either on a prorated basis in accordance with the prescribed annual rates for assets that are not acquired at the beginning of the financial year or on an annual basis.

The cost of repairs and maintenance exceeding 10% of the acquisition cost of the asset in a given year is deemed to be an expense of a capital nature and should be capitalised and depreciated over the remaining life of the asset.


Cost of acquisition of goodwill/amortisation of goodwill is generally deductible to the extent it is incurred in the generation of assessable profits.

Interest expenses

There is no thin capitalisation rule in Macau SAR. However, the MFB may assess the reasonableness of the interest rate charged for interest expense paid to related parties.

Bad debts

The amount provided against doubtful trade receivables is an allowable tax deduction, but the provision cannot exceed 2% of the total receivables, except in the case of banks, where the minimum provisions required under the local banking regulations are fully tax-deductible.

Debts considered uncollectible may be written off only when adequate proof can be shown, usually by way of bankruptcy court proceedings.

Charitable contributions

A deduction of up to 0.2% of the taxpayer's turnover is allowable for donations to charitable organisations recognised by the tax authority.

Pension expenses

The employer's contribution to the staff provident fund legally registered in Macau SAR is fully tax-deductible, up to 15% of the employees' basic salary.

Fine and penalties

Tax fines are not deductible.


Taxes, except for complementary tax and taxes paid on corporate profits, are generally deductible to the extent they are incurred in the generation of assessable profits.

Other significant items

  • An amount provided against stock obsolescence of up to 3% of the total stock value at year-end is allowed as a tax deduction.
  • Losses arising from insurable risks are not allowable as a tax deduction.
  • Staff social welfare expenses paid for the benefit of employees (e.g. canteens, libraries) are fully tax-deductible.

Net operating losses

Agreed tax losses can be carried forward for three consecutive years for Group A taxpayers. Group B taxpayers are not allowed to carry their tax losses forward to future years. Tax losses cannot be carried back in Macau SAR.

Payments to foreign affiliates

The regulations make no specific mention of royalties and service fees paid to foreign affiliates. The MFB generally monitors the deductibility of such payments. Payments to foreign service providers for consulting services or construction-related services are not deductible if such consulting contracts are not properly registered in Macau SAR.