Macau SAR

The paragraphs below describe the tax acceptable treatments under the prevailing Complementary Tax Law and are for reference only.

Inventory valuation

Inventory should be stated at actual cost, and conformity between book and tax reporting is required. Market selling price or replacement cost is allowed only in special circumstances, and prior approval of the Director of the MFB is required for adoption of such inventory valuation methods. The write-down of inventory values is not permitted.

Capital gains

Macau sourced capital gains or losses from the realisation of capital assets of a corporate taxpayer are treated as current revenue or expense items for complementary tax purposes.  

Dividend income

Dividends were paid out of profits that have been taxed at the corporate level in Macau SAR are generally exempted from complementary tax. Where dividends to shareholders are paid out of profits of a Macau entity that have not been taxed in Macau SAR, complementary tax will technically be charged on the dividend distribution to the shareholders. 

Dividends from overseas companies are generally not subject complementary tax.  However, for Macau tax residents who are Constituent Entities of multinational enterprise (MNE) groups, dividends from overseas companies will still fall within the scope of the complementary tax.  A unilateral tax credit is available in such case to mitigate double taxation (see Foreign income below).

Interest income

Macau sourced interest income received by or accrued to a corporate taxpayer in Macau SAR is subject to complementary tax. 

Royalty income

Macau sourced royalty income received by or accrued to a corporate taxpayer in Macau SAR is subject to complementary tax. 

There is currently no withholding tax (WHT) imposed on royalties paid or accrued to a non-resident provided that such non-resident has not carried on commercial/industrial activities in Macau SAR.

Foreign income

Macau resident corporations are not taxed on their worldwide income.  Foreign-sourced income is generally not taxed.  However, for Macau tax residents who are Constituent Entities of multinational enterprise (MNE) groups, income including dividends, interest, royalties, and gains from the disposal of property derived from outside of the Macau SAR will still fall within the scope of the complementary Tax. Notably, this provision applies only to Macau tax residents who are Constituent Entities of MNE groups. In other words, Macau tax residents who are not Constituent Entities, as well as non-Macau tax residents, are not required to pay tax on such foreign-sourced income.

If the aforementioned taxpayers have already paid taxes of the same nature as that of complementary tax in other tax jurisdictions on their foreign-sourced income, the amount paid can be used as a credit against the complementary tax payable for the corresponding year. This credit is capped at the complementary tax payable calculated under the Macau Tax Laws. For foreign-sourced dividends, if a Macau tax resident holds at least 10% of the shares in the foreign entity distributing the dividends, the actual income tax paid on the underlying profits used to distribute the dividends can also be creditable in proportion to the shareholding, effectively alleviating the issue of double taxation.