Authorities probe ‘red and yellow banner’ stores for potential tax violations

The Financial Services Bureau (DSF) has launched an investigation into so-called “red and yellow banner” shops following public reports of possible tax violations, while the Customs Service (SA) says no illegal activity has been identified so far.

In a written response to the Times’ inquiry, the bureau said it is “aware of the situation and will investigate any potential tax violations.”

According to several reports from the public and comments by netizens, these stores, which have started to appear and rapidly proliferate in several areas of Macau, were suspected of selling counterfeit goods and replicas.

In a separate response on the same matter, the Customs Service (SA) told the Times that it had “discovered the situation during a market inspection in June this year and immediately launched an investigation.”

Admitting it had also received several reports from the public on suspicions of selling counterfeit goods, the SA said it had investigated 13 of these stores with the help of brand authenticators and found no illegalities or copyright infringements so far.

“To investigate the goods sold in 13 similar stores, Macau Customs has contacted some brand authenticators to authenticate the goods, and, for the time being, no counterfeit goods have been found. In addition, Macau Customs has also investigated the source of the goods and found no violations,” the SA remarked.

The same service also said, “It must be emphasized that Macau Customs will continue to monitor the relevant shops and follow up on the authentication of more brands. If any infringement activities are involved, they will be dealt with in accordance with the law.”

According to some reports from members of the public, some of these stores only accepted payments in cash, did not issue receipts, and did not allow changes or refunds for the products sold, which caused some consumers to have concerns about the nature of the goods.

In at least one case, one of the citizens claimed that the store was using an e-payment terminal that did not belong to the store but was registered under a different person or company. In this case, the e-payment terminal was said to belong to a fruit and vegetable stall that operated nearby.

DSF has said it is investigating these and other alleged unlawful practices that may violate local tax laws.

In general, these stores, which are regarded as “red and yellow banner” due to using only a red background with yellow Chinese characters to display their name, occupy vacant commercial spaces left by other businesses after their recent closures.

They usually move into these recently vacated commercial spaces in high-foot-traffic areas and immediately start selling goods and products. Many do not have storage or display shelves and sell directly from transport boxes in a “warehouse sale style.”

These stores sell a wide variety of products, from clothing, shoes, handbags, and fashion accessories to personal electronics, perfumes, cosmetics, and, in some cases, packaged foods.

Many of these products feature well-known international luxury brands and are sold at a fraction of the regular price these products usually have in specialty stores.

In its statement to the Times, the DSF also expressed appreciation for the public’s cooperation and encouraged continued reporting of suspected irregularities.

155 counterfeit products seized at Horta e Costa

Just a few hours after the Customs Service (SA) responded to the Times on the case of the alleged counterfeit products, the same service launched an operation that resulted in the seizing of 155 branded items, including clothing and handbags, suspected of being counterfeit.

The products were on sale at a store on Avenida de Horta e Costa.

According to officials from the SA, during an emergency press conference held late last week, the products were said to have a market value of around MOP2.4 million.

In the operation, the SA also apprehended a 47-year-old non-local salesperson.

The SA has said that they are still investigating the case to trace the source of the goods and the salesperson’s relationship with the shop.

SA officials have noted that the operation was part of ongoing cooperation between Guangdong, Hong Kong, and Macau authorities to protect intellectual property rights.

They said that the handbags first alerted the authorities, with an authenticator from the brand immediately claiming that they were counterfeit products of relatively low quality.

The store was selling the items with prices ranging from MOP500 to around MOP2,500.

Authorities said the store started operating at this location around three years ago.

The SA has said it will continue enforcing the law and launching more operations to protect both the consumer and the brand’s proprietary rights.

The notice of the SA press conference was only sent to the media via the Government Information Bureau at 10:12 a.m. (the event started at noon) and was disclosed only in Chinese.