Gov’t exempted from income tax on mainland investments

The local government will be exempted from income tax when investing in the mainland, once a new protocol to avoid double taxation comes into effect.
The Fourth Protocol to the Arrangement between the Mainland and the Macau SAR on the Avoidance of Double Taxation and Prevention of Evasion of Income Tax will exempt from income tax those investments made by the local government in the mainland, namely via the Guangdong-Macau Cooperation and Development Fund.
Once the Fourth Protocol comes into effect, investments made by the Guangdong-Macau Cooperation and Development Fund will be exempted from tax estimated at approximately 800 million yuan. Currently, a 10-percent income tax is levied on investments made in the mainland by the Guangdong-Macau Cooperation and Development Fund.
Currently, the Guangdong-Macau Cooperation and Development Fund has completed its scheduled injection of capital. In addition to the guaranteed return of 3.5 percent on the actual investment – the Macau SAR government would be entitled to extra returns if the fund’s returns exceed a certain threshold.
The protocol was signed yesterday by Chief Executive Chui Sai On and the Commissioner of the State Taxation Administration, Wang Jun, during a ceremony held at the Macau Government Headquarters.
The Arrangement between the Mainland and the Macau SAR on the Avoidance of Double Taxation and Prevention of Evasion of Income Tax, was first signed in 2003, with subsequent updates in 2009, 2011 and 2016 respectively.