Tax incentives for the tax year 2022
On 16 December 2021, the Legislative Assembly approved certain tax incentives proposed by the Chief Executive of Macau Special Administrative Region (SAR) in the Budget for the financial year 2022. The key tax incentives include the following:
- The tax-free income threshold for complementary (corporate) tax has been increased from 32,000 Macanese patacas (MOP) to MOP 600,000 for income derived in the tax year 2021. Taxable income over MOP 600,000 is taxed at 12%.
- There will be enhanced tax deduction for research and development (R&D) expenditure incurred for innovation and technology projects by complementary tax Group A taxpayers for the tax year 2022 (300% tax deduction for the first MOP 3 million of qualifying R&D expenditure, and 200% tax deduction for the remaining amount, subject to a limit of MOP 15 million in total).
- Income received from or derived in Portuguese speaking countries will be exempt from complementary tax for the tax year 2022, provided such income has been subject to tax in its place of origin.
- Interest income derived from debt instruments issued in Macau SAR or income derived from sale, redemption, or disposal of debt instruments issued in Macau SAR will be exempt from complementary tax for the tax year 2022.
- The standard MOP 3,500 reduction in property tax liabilities will continue to be available in the tax year 2022 for both self-use and rental properties. This incentive does not apply to corporate and non-Macau residents.
- Property tax rate for rental properties will be reduced to 8% for the tax year 2022.
- Restaurants will continue to be exempt from tourism tax in the tax year 2022.
- Insurance policies written or renewed in the tax year 2022 and banking transactions in the tax year 2022 will continue to be exempt from stamp duty.
- Admission tickets for performances, exhibitions, and entertainment programs will continue to be exempt from stamp duty in the tax year 2022.
- Debt instruments issued, sold, or transferred in Macau SAR will be exempt from stamp duty for the tax year 2022.
- Commercial and industrial operations will continue to be exempt from the annual industrial tax in the tax year 2022.
Amendment bill on Macau stamp duty
The Legislative Assembly approved the amendment bill for the Macau Stamp Duty Law on 16 December 2020 to cope with the current socioeconomic developments in Macau SAR. The amendment bill became effective on 31 March 2021, and the key amendments include the following:
- Physical stamps have been abolished with a transitional period of two years.
- The following specific types of stamp duty that are considered uncommon, hard to collect, or outdated have been abolished:
- 0.5% on rental of movable assets.
- MOP 100 on issuance of resident permits to foreigners.
- 1% to 2% on ferry tickets.
- 0.5% on lifetime gift.
- MOP 20 on private agreements.
- 0.1% to 0.4% for injection and increase of registered capital of limited companies.
- 1% on transfer of business.
- Rental agreements with arbitration clause will be eligible to reduction of stamp duty by half from 0.5% to 0.25%. However, the landlord will be required to pay back the reduced stamp duty within 30 days if the arbitration clause is abolished, expired, or nullified in the future.
- Landlord will be obligated to report by June the floating rent received during the previous year for additional stamp duty assessment.
- Landlord will be obligated to report rental increment/reduction, extension, or early termination of rental contract for additional stamp duty assessment/refund.
- Grant of right to use shops, places, or other spaces in commercial centres or complex is subject to 0.5% stamp duty like normal rental agreements, regardless of how it is worded or how it is remunerated.
- Penalties for violation of the Stamp Duty Law will be up to 10 times stamp duty payable, with increased lower limit of MOP 1,000 based on nature of the violation.
Incentives for science, technology, and innovation business
On 21 January 2021, the Legislative Assembly passed the bill of tax incentive scheme for science, technology, and innovation business following the Macau SAR’s policy focus on promoting technological innovation for transforming Macau SAR into a smart city. The bill became effective on 1 April 2021, and the benefits granted under the scheme include the following:
- Exemption of stamp duty for acquisition of one property for self-operation purpose, except for residential property. In case the property is sold or is no longer deployed in science, technology, and innovation business within five years, the stamp duty so exempted would be clawed back.
- Exemption of property tax for the first five years from the time the afore-mentioned property was first acquired.
- Exemption of complementary tax for three years starting from the year the qualifying entity declares a taxable profit. The exemption is limited to profits generated from science, technology, and innovation business, with related income and expenses separately identifiable.
- Dividends distributed to shareholders can also enjoy the afore-mentioned complementary tax exemption treatment.
- Employees engaged in administration, management, and science, technology, and innovation development will be entitled to double the tax-free income threshold for three years, from the current level of MOP 144,000 to MOP 288,000.