Agreement to avoid double taxation on Macau and Taiwan aviation industry

The agreement to avoid double taxation on the aviation industry across Macau and Taiwan came into effect in the second week of February. The Chief Executive signed a notice, which was published in the government’s Official Gazette, notifying the implementation of the memorandum.

The notice remarks on how the implementation of the agreement requires both governments to notify each other of their respective domestic legal procedures.

The notice also acknowledges that the Chinese and Portuguese versions of the agreement were both published back in May 2016.

The terms of the agreement published in 2016 are applicable to the supplementary income tax in Macau, to the income taxes of profit-making businesses, and to taxes on commercial and industrial activities in Taiwan.

When the airlines of one region obtains income, profits, or revenue from the other region, the airlines shall be exempted from tax in the other jurisdiction, according to the agreement.

The Macau air carriers, which are registered in Taiwan for commercial or industrial activities, shall apply a zero-tax rate with respect to aviation services provided in Taiwan. 

These two provisions mentioned above shall also be applied to the income, benefits or revenues resulting from joint ventures.

It is believed that the agreement will boost both the Macau and Taiwan aviation market.

The agreement was also an effort to convert a similar memorandum signed by guild from both sides in 1998 into a long-term and constitutional agreement.