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Macau (SAR), China - Income Tax
Macau (SAR), China - Income Tax
Taxation of international executives
Tax returns and compliance
Tax rates
Residence rules
Termination of residence
Economic employer approach
Types of taxable compensation
Tax-exempt income
Expatriate concessions
Salary earned from working abroad
Taxation of investment income and capital gains
General deductions from income
Tax reimbursement methods
Calculation of estimates/prepayments/withholding
Relief for foreign taxes
General tax credits
Sample tax calculation
All information contained in this document is summarized by KPMG, a Macau (SAR) partnership and a member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on Law No. 21/78/M introduced in September 1978 regarding Macau (SAR) Complementary Tax, personal income tax imposed under Law No. 2/78/M in February 1978, the further amendments made by Executive Order No. 267/2003 in December 2003, property tax under Law No. 19/78/M in August 1978, the further amendments based on Law No. 1/2011 and Law No.1/2018, stamp duty tax imposed under Law No. 17/88/M, and Law No.4/2010 regarding social security system and further amendment made by Executive Order No. 357/2016 and Law No.6/2018
Tax returns and compliance
When are tax returns due? That is, what is the tax return due date?
An annual return form M3/M4 is to be filed by the employer within January and February following the year of assessment. Separate returns should be made for employees with residence or work permit and short-term business travelers allowed to work without a permit.
Employees with income from more than one employer also are required to file an annual return form M/5 before the end of February of the following year.
Self-practitioners are required to file an annual return form M/5 before the end of February of the following year if proper books and records are not maintained, and the filing deadline is 15 April of the following year for those with proper books and records.
What is the tax year-end?
31 December.
What are the compliance requirements for tax returns in Macau (SAR)?
Residents and non-residents
For residents and non-residents with a working permit, tax payment is made quarterly (15 January, 15 April, 15 July, and 15 October) by the employer and the filing of detail remuneration is not required. For expatriate employees, a tax return is filed monthly, 15 days after receiving the remunerations.
Tax rates
What are the current income tax rates for residents and non-residents in Macau (SAR)?
Residents and non-residents with working permit
Income tax table for 2019
| Taxable income bracket | Total tax on income below bracket | Tax rate on income in bracket | |
| From MOP | To MOP | MOP | Percent |
| 0 | 144,000 | 0 | 0 |
| 144,001 | 164,000 | 0 | 7 |
| 164,001 | 184,000 | 1,400 | 8 |
| 184,001 | 224,000 | 3,000 | 9 |
| 224,001 | 304,000 | 6,600 | 10 |
| 304,001 | 424,000 | 14,600 | 11 |
| 424,001 | Over | 27,800 | 12 |
Expatriates
Income tax payable is the higher of 5 percent of taxable income and the amount calculated using the progressive tax rates as stated earlier.
Residence rules
For the purposes of taxation, how is an individual defined as a resident of Macau (SAR)?
There is no distinction between residents and non-residents for tax purposes. An individual is regarded as being a resident of Macau (SAR) if they possess an identity card issued by Macau (SAR) or have a Permanent Resident Permit issued by the Macau (SAR) Immigration Department. A non-resident is required to apply for a non-resident working permit in order to work in Macau (SAR).
For instructional, technical, quality control, or business supervisory service pursuant to an agreement between a foreign enterprise and a natural person or legal entity residing in Macau (SAR) for the provision of certain specific and non-recurrent projects or services, a non-resident working permit is not required if the non-resident stays continuously or intermittently in Macau (SAR) for work or service for a maximum of 45 days in every 6 consecutive months.
Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country/territory for more than 10 days after their assignment is over and they repatriate.
No.
What if the assignee enters the country/territory before their assignment begins?
Assignees are subject to income tax once they start working in Macau .
Termination of residence
Are there any tax compliance requirements when leaving Macau (SAR)?
When the person with a working permit starts working in Macau (SAR), an M2 form should be filed.
On quitting the current employment, a M2A form should be filed.
What if the assignee comes back for a trip after residency has terminated?
No restriction.
Communication between immigration and taxation authorities
Do the immigration authorities in Macau (SAR) provide information to the local taxation authorities regarding when a person enters or leaves Macau (SAR)?
Not automatic but may be upon the local taxation authorities’ request.
Filing requirements
Will an assignee have a filing requirement in the host country/territory after they leave the country/territory and repatriate?
No.
Economic employer approach
Do the taxation authorities in Macau (SAR) adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the taxation authorities in Macau (SAR) considering the adoption of this interpretation of economic employer in the future?
No and no updates about an adoption in the future. Currently, the Macau (SAR) tax authority considers all employment (including certain self-employed freelances and professions) income earned in Macau (SAR) as taxable, even for a single day.
De minimus number of days
Are there a de minimus number of days2 before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?
Not applicable.
Types of taxable compensation
What categories are subject to income tax in general situations?
- employment income and remuneration
- daily wages
- salaries
- service fees
- bonuses
- commissions
- allowances and gratuities
- directors’ fees
- share of profits
- share options
- non-cash benefits such as electricity, servants, car benefits, telephone, and so on.
Intra-group statutory directors
Will a non-resident of Macau (SAR) who, as part of their employment within a group company, is also appointed as a statutory director (i.e., member of the Board of Directors in a group company situated in Macau (SAR)) trigger a personal tax liability in Macau (SAR), even though no separate director's fee/remuneration is paid for their duties as a board member?
Directors of a Macau (SAR) company are taxed as the employee of the Macau (SAR) entity.
a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Macau (SAR)?
Yes.
b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Macau (SAR) (i.e., as a general management fee where the duties rendered as a board member is included)?
No, as long as the director are paid for their role to implement the director’s duty and other responsibilities.
c) In the case that a tax liability is triggered, how will the taxable income be determined?
There are no specific guidance. The company may apply a reasonable basis to allocate part of the remunerations of the director as taxable income derived from Macau (SAR).
Tax-exempt income
Are there any areas of income that are exempt from taxation in Macau (SAR)? If so, please provide a general definition of these areas.
Allowances up to the maximum limit granted for civil servants include the following:
- family allowance
- marriage allowance
- birth allowance
- death allowance
- funeral allowance
- transportation allowance
- payments set by law to be made to an employee as compensation for injuries, including permanent incapacity
- severance payments for termination of employment to employees for long service payment according to law
- medical expenses with supporting documents
- lump-sum payments made to employees on retirement or withdrawals made by an employee from an approved pension fund.
Certain employer provided housing allowances (employer’s contribution to rent)
Non-monetary annual housing allowance is subject to professional tax with a taxable limit of the lower of the annual rental of the place and 15 percent of the total annual cash remuneration received by the employee.
Certain employer provided housing allowances (monetary compensation)
Housing allowances provided by the employer are subject to professional tax with a non-taxable limit of MOP3,520 per month in 2019.
Rental allowance (reimbursement of rental)
Rental allowance provided by the employer is subject to professional tax with non-taxable limits as follows:
- one bedroom: MOP3,500/month
- two bedrooms: MOP4,700/month
- three bedrooms: MOP8,700/month
- four bedrooms: MOP10,000/month
- five bedrooms: MOP12,000/month.
Marriage allowance
Marriage allowance provided by the employer is subject to professional tax with a non-taxable limit of MOP3,960 in 2019.
Birth allowance
Birth allowance provided by the employer is subject to professional tax with a non-taxable limit of MOP5,280 in 2019.
Death allowance
Death allowance provided by the employer is subject to professional tax with a non-taxable limit of six time’s monthly remuneration.
Funeral allowance
Funeral allowance provided by the employer is subject to professional tax with a non-taxable limit of MOP4,840 in 2019.
Transportation allowance
Different types of transportation allowances may be provided by the employers such as the transport of remains, business trips, home trips, and expenses related to setting up an entity. These are all taxable with non-taxable limits depending on the nature of the trip as well as the origin and destination of the trip.
Non-cash benefits received by employees
There is a deemed taxable value for non-cash benefits (maximum) as follows:
- electricity: MOP500/month
- servants: MOP1,500/month
- car benefits: MOP500/month
- telephone: MOP720/year.
Expatriate concessions
Are there any concessions made for expatriates in Macau (SAR)?
Expatriates receive the same tax treatment as residents and non-residents with working permit.
Salary earned from working abroad
Is salary earned from working abroad taxed in Macau (SAR)? If so, how?
General rule
Whether salary earned from working abroad is taxed in Macau (SAR) or not depends on the source of income. If the income is paid through Macau (SAR), it is subject to Macau (SAR) professional tax; otherwise, it is subject to foreign income tax only.
Under the agreements between Macau (SAR) and the PRC, Macau (SAR) and Portugal and Macau (SAR), the Republic of Mozambique and The Republic of Cape Verde (in avoidance of double taxation).
Foreign-sourced salary and wages income of a Macau (SAR) resident will be taxable in Macau (SAR) (professional tax) where:
- the recipient is present in the foreign place for a period or periods not exceeding in the aggregate 183 days in any 12-month period commencing or ending in the fiscal year concerned
- the remuneration is paid by, or on behalf of, an employer who is not a resident of that foreign place
- the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the foreign place.
Otherwise, income generated in the foreign place will be taxable in that corresponding place.
Taxation of investment income and capital gains
Are investment income and capital gains taxed in Macau (SAR)? If so, how?
Investment income (such as rental income, gain from stock option exercise and dividends) is assessed to tax in the year in which it is received.
Rental income
Rental income in Macau (SAR) is subject to property tax. Under the regulations, property taxes generally are levied on two categories of real estate properties. The first applies to leased properties on which the levies are based on the actual rental income at the rate of 8 percent for 2019. The second category involves properties which have not been rented and are occupied by the owners, in which case taxes are levied at 6 percent on the assessable rental value. The assessable rental value is estimated by the government and revised periodically after taking into account all relevant factors and changes in the property market.
Gain from stock option exercise
Gain from an employee stock option exercise is subject to professional tax for both residents and non-residents.
Dividends
Dividends received are subject to income tax based on the company’s income tax rate, that is zero percent (for income below MOP600,000) and 12 percent for income over MOP600,001 for the year of assessment 2018 (1 January – 31 December). Details for the year of assessment 2019 have not yet been announced.
General deductions from income
What are the general deductions from income allowed in Macau (SAR)?
For income from employment, there is a general personal deduction of 25 percent of total remuneration. For self-practitioners, expenses incurred such as personnel costs, rent, depreciation, and administrative expenses normally are deductible. Losses brought forward from past 3 years also are deductible if the taxpayers maintain proper books and records.
Tax reimbursement methods
What are the tax reimbursement methods generally used by employers in Macau (SAR)?
Current year gross-up is the normal method of recognizing tax reimbursements paid by the employer.
Calculation of estimates/prepayments/withholding
How are estimates/prepayments/withholding of tax handled in Macau (SAR)? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.
Pay-as-you-earn (PAYE) withholding
Deductions from employment income are covered under the PAYE system.
If an individual is paid and/or employed, the employer will be required to withhold tax from their salary and wages and remit the tax to the Macau (SAR) tax department.
When an individual commences employment, they will be requested to quote their Tax File Number (TFN) to their employer.
When are estimates/prepayments/withholding of tax due in Macau (SAR)? For example: monthly, annually, both, and so on.
- Within 15 days since payment to expatriates, and
- quarterly for Macau (SAR) residents and non-residents with a working permit.
Relief for foreign taxes
Is there any Relief for Foreign Taxes in Macau (SAR)? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?
Macau (SAR) has entered into double taxation treaties with Mainland China, Portugal, The Republic of Mozambique and The Republic of Cape Verde to prevent double taxation.
General tax credits
What are the general tax credits that may be claimed in Macau (SAR)? Please list below.
None.
Sample tax calculation
This calculation assumes a married taxpayer resident in Macau (SAR) with two children whose 3-year assignment begins 1 January 2017 and ends 31 December 2019. The taxpayer’s base salary is 100,000 US dollars (USD) and the calculation covers 3 years.
| 2017 USD |
2018 USD |
2019 USD |
|
| Salary | 100,000 | 100,000 | 100,000 |
| Bonus | 20,000 | 20,000 | 20,000 |
| Cost-of-living allowance | 10,000 | 10,000 | 10,000 |
| Housing allowance | 12,000 | 12,000 | 12,000 |
| Family allowance | 0 | 0 | 3,000 |
| Company car (non-cash) | 6,000 | 6,000 | 6,000 |
| Moving expense reimbursement | 20,000 | 0 | 20,000 |
| Home leave | 5,000 | 0 | 0 |
| Education allowance | 3,000 | 3,000 | 3,000 |
| Interest income from non-local sources | 6,000 | 6,000 | 6,000 |
Exchange rate used for calculation: USD1.00 = MOP7.92.
Other assumptions
- All earned income is attributable to local sources.
- Bonuses are paid at the end of each tax year, and accrue evenly throughout the year.
- Interest income is not remitted to Macau (SAR).
- The company car is used for business and private purposes and originally cost USD50,000. 6,000 is the annual depreciation of the car.
- The employee is deemed resident throughout the assignment.
- Tax treaties and totalization agreements are ignored for the purpose of this calculation.
Calculation of taxable income
| Year ended | 2017 MOP |
2018 MOP |
2019 MOP |
| Days in Macau (SAR) during year | 365 | 366 | 365 |
| Earned income subject to income tax | |||
| Salary | 792,000 | 792,000 | 792,000 |
| Bonus | 158,400 | 158,400 | 158,400 |
| Cost-of-living allowance | 79,200 | 79,200 | 79,200 |
| Net housing allowance | 95,040 | 95,040 | 95,040 |
| Family allowance | 0 | 0 | 23,760 |
| Company car (NB1) | 6,000 | 6,000 | 6,000 |
| Moving expense reimbursement | 158,400 | 0 |
158,400 |
| Home leave | 39,600 |
0 | 0 |
| Education allowance | 23,760 | 23,760 | 23,760 |
| Total earned income | 1,352,400 | 1,154,400 | 1,336,560 |
| Other income | 0 | 0 | 0 |
| Total income | 1,352,400 | 1,154,400 | 1,336,560 |
| Deductions | |||
| Housing allowance (NB2) | 39,840 | 40,800 | 42,240 |
| Family allowance (NB3) | 0 | 0 | 10,560 |
| Moving expense reimbursement (NB4) | 2,500 | 0 | 2,500 |
| General deduction (NB5) | 327,515 | 278,400 | 320,315 |
| Total deductions | 369,855 | 319,200 | 375,615 |
| Total taxable income | 982,545 | 835,200 | 960,945 |
Calculation of tax liability
| 2017 MOP |
2018 MOP |
2019 MOP |
|
| Taxable income as above | 982,545 | 835,200 | 960,945 |
| Macau (SAR) tax thereon | 94,825 | 77,144 | 92,233 |
| Less: | |||
| Domestic tax rebates (dependent spouse rebate) | 0 | 0 | 0 |
| Foreign tax credits | 0 | 0 | 0 |
| Current year tax deduction (NB6) | (28,447) | (23,143) | (27,670) |
| Total Macau tax | 66,378 | 54,001 | 64,563 |
NB1: If the company provides a car to the employee, MOP500/month is calculated as the taxable non-cash remuneration received by the employee.
NB2: The non-taxable monthly housing allowance for 2017 to 2019 are MOP3,320, MOP3,400 and MOP3,520, respectively.
NB3: The non-taxable monthly family allowance for 2019 is MOP880.
NB4: The first MOP2,500 moving expense reimbursement is non-taxable for employee with monthly salary over MOP30,000
NB5: There is a general deduction calculate at 25 percent of net taxable income
NB6: The Financial Budget of the Macau (SAR) of 2017 to 2019 grants a 30 percent deduction to the professional tax payable. This is a temporary tax relief granted on annual basis.
Footnote
1Certain tax authorities adopt an "economic employer" approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country/region for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country/region employer but the employee's salary and costs are recharged to the host entity, then the host country/region tax authority will treat the host entity as being the "economic employer" and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied and the employee would be subject to tax in the host country/region.
2For example, an employee can be physically present in the country for up to 60 days before the tax authorities will apply the ‘economic employer’ approach.
Foreign Financial Assets
Is there a requirement to declare/report offshore assets (e.g., foreign financial accounts, securities) to the country/territory’s fiscal or banking authorities?
No such requirement for individuals
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