The government is planning a major overhaul of the Macao Tax Code to bring it in line with international standards, which will be submitted to the Legislative Assembly for evaluation.
“In order to establish a more modern tax regime that meets the economic development requirements of Macao and public administration reform, authorities consider it essential to draw up a Tax Code which will form the basis of the tax regime of Macao,” the city’s Executive Council has declared.
Macao is at present regarded as a tax haven, with both residents and non-residents profiting from low taxes levied against professional and business income.
Foreign earnings are not taxed, but residents are exempted from the first MOP 144,000 they earn themselves, while the maximum rate is just 12 per cent.
According to the Executive Council, Macao’s current tax regime was created piecemeal in the 1970s and constitutes “for the most part of separate tax laws, drawn up in accordance with the need for tax collection” without including broader tax concepts and principles.
The new tax code includes a total of 293 legal articles, divided into five sections covering Tax Order, Tax Legal Relationship, Tax Proceedings, Tax Legal Proceedings and Tax Foreclosure Proceedings.
New concepts that distinguish between “tax resident” and “tax residence” will be introduced to comply with international tax obligations and tempt more foreign investors to the SAR.
The new code also aims to “unify the separate rules of the current tax legislation”, as well as clearly define the rights and obligations in tax legal relations, in the tax judicial process and in the process of tax enforcement, in order to “fully safeguard the legitimate rights and interests of taxpayers and other taxpayers”, while ensuring city’s tax revenues.
The proposed code will also incorporate a new legal framework for the exchange of information in tax matters, so as to comply with the latest international standards established by the “Global Forum on Transparency and Exchange of Information in Tax Matters” from the Organisation for Economic Co-operation and Development.
The new code proposal also proposes that sanctions be applied for violating or circumventing the obligations on due diligence; to financial institutions that have not obtained, from their customers, self-certification or relevant documents proving that they are foreign tax residents; or for not keeping, during the indicated period, the required financial information.
