The Macau SAR Budget was approved by Law 19/2018, and was published in the Official Gazette on December 31, 2018 (the “2019 Budget”). As usual, it dealt with tax-related matters that are very important for Macau residents and companies – notably, it set forth better conditions for the upcoming year than those provided by the applicable tax statutes.
The 2019 Budget grants a total exemption from industrial tax (Contribuição Industrial). Industrial tax is levied annually and payable by all entities (natural and legal persons) that perform any kind of commercial or industrial activity – it is a one-off payment of a fixed, pre-determined amount. This exemption has long been granted by successive Macau SAR Annual Budgets.
Regarding stamp duty (Imposto do Selo), several exemptions are granted by the 2019 Budget: (i) exemption of stamp duty on insurance policies and on banking operations; (ii) exemption of stamp duty on the transfer of real estate for residential purposes, up to a transfer amount of MOP3,000,000, provided that some requirements are met by the purchaser (must be of legal age and cannot own any other immovable property in the Macau SAR); (iii) exemption of stamp duty on auctions of goods or assets; (iv) exemption of stamp duty on shows, exhibitions or amusements of any kinds; (v) exemption of stamp duty on the issue or purchase of public debt securities.
Also, licencing fees and stamp duty regarding the display of advertising and propaganda material will not be charged in 2019.
Another tax benefit in the 2019 Budget is that a tourism tax exemption has been granted to majority of the tourism operators.
With respect to personal income tax (“PIT” – Imposto Profissional), the 2019 Budget sets forth that: (i) there will be a deduction of 30 percent to the tax payable; (ii) the tax-exemption threshold will be of MOP144,000 (instead of MOP5,000, as established in the PIT Regulations); (iii) there will be a withholding exemption for salaries of up to MOP16,000 per month; (iv) the tax-exemption threshold for employees with more than 65 years or with a permanent disability equal or above 60 percent will be of MOP98,000 (instead of MOP135,000). In addition, the 2019 Budget establishes a reimbursement for 60 percent of PIT from 2017 up to a maximum amount of MOP14,000, which was paid by residents in the Macau SAR – this means that the tax bill of Macau SAR residents could, in fact, be much lower than it appears.
The 2019 Budget also provides a fixed MOP3,500 tax deduction to real estate property tax payable by resident individuals that are not entrepreneurs. Additionally, the real estate property tax rate for leased property has been reduced from 10 percent to 8 percent.
Regarding corporate income tax (“CIT” – Imposto Complementar de Rendimentos) applicable to companies and individuals that carry out industrial or commercial activities, the tax-exemption threshold for income obtained in the 2018 financial year has been increased to MOP600,000. Income above that threshold is taxed at a 12 percent rate. Furthermore, the 2019 Budget creates higher deductions for expenses related to innovation, and science and technology activities. Also, some kinds of income are exempt from CIT, notably: (i) interest obtained from debt securities issued in the Macau SAR by the Central State, local governments and central companies of the People’s Republic of China; and (ii) income obtained or sourced in Portuguese- speaking countries, provided that it was taxed in said countries.
In conclusion, one may say that the Macau SAR budgets create exemptions (notably tax benefits) to the general tax law, which will apply during the year in which each budget will be in force. The Macau SAR Government could consider including such exemptions in the general tax law, at least in such cases where the exemptions are recurrently approved in successive annual budgets.