Foreign tax credit
There is no foreign tax credit provision in the Macau Complementary Tax Law. Foreign tax credit is only available under the relevant provisions of the comprehensive tax arrangements/agreements that Macau SAR has entered into with the People's Republic of China, Portugal, Mozambique, Cabo Verde, Vietnam, Hong Kong SAR and Cambodia respectively.
Capital investment incentives
A 50% reduction in complementary tax and stamp duty on certain transactions, as well as exemptions from annual industrial tax (currently exempt for all taxpayers) and property tax (up to periods prescribed by the MFB), are allowable for taxpayers in the manufacturing industry (as defined in the Decree-Law) whose capital investment is aimed at the introduction of new products or high technology, improvement of productivity, and increase in exports of goods to new markets.
Where profits are retained in reserves and reinvested in installation of new equipment within the following three financial years, the reinvested reserves can be deducted from taxable profits, provided that the reinvested reserves are attributable to profits earned from normal business operations and the investment is considered to be beneficial for the economic development of Macau SAR.
Incentives for owners of touristic facilities
Additional incentives, such as an extended property tax exemption period, exemption from annual industrial tax (currently exempt for all taxpayers), reduction in stamp duty, as well as acceleration of depreciation for complementary tax purposes, are available to owners of facilities that qualify as touristic facilities.
Incentives for financial leasing companies
Approved financial leasing companies are exempt from stamp duty for registration of start-up/additional capital, interest and commission, and financial leasing contracts. Premise purchased for financial leasing operation is exempt from stamp duty, subject to a cap of MOP 500,000.
For complementary tax deduction purpose, tax deductible depreciation for financial leasing assets can be accelerated to three times for complementary tax purposes. The complementary tax rate is reduced from 12% to 5%. The tax allowable threshold for bad debt provision is increased from 2% to 10% on total receivables; bad debt provision exceeding 10% of total receivables is not allowed as tax deduction. Financial leasing income derived from jurisdictions outside of Macau SAR will be exempt from complementary tax provided that such income has been subject to tax at its place of origin.
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.