Operating a business in Macau comes with certain tax obligations, primarily profits tax and industrial tax. However, in recent years, the Macau Government has waived industrial tax and raised the profits tax exemption threshold (2018), making Macau one of the most tax-friendly jurisdictions in Asia.

Complementary Income Tax applies to the global income of entities registered in Macau, regardless of their physical presence or the nature of the earnings (except rental income). Foreign companies conducting business, providing services, or engaging in commercial/industrial activities in Macau are also subject to this tax.

Beyond business income, capital gains and interest income earned by Macau-based companies also fall under the scope of Complementary Income Tax.

Taxpayer Categories in Macau

For Complementary Income Tax, businesses are classified into two groups:

Group A Taxpayers

• Required to have their financial statements audited.
• Allowed to carry forward tax losses for up to three years.

Group B Taxpayers

• Not required to undergo financial audits.
• Cannot carry forward tax losses.

To prevent double taxation, Macau has agreements in place with jurisdictions such as Mainland China, Hong Kong, and Portugal, benefiting individuals and businesses operating across these regions.

Who Is Subject to Complementary Income Tax?

Complementary Income Tax, also known as corporate income tax or profits tax, applies to adjusted business profits generated from commercial or industrial activities in Macau.

Classification of Taxpayers

Macau Corporate Tax Rates

Macau applies a progressive tax rate based on taxable profits:

This exemption was introduced in 2014, allowing businesses to benefit from lower tax burdens.

Determining Taxable Income

Taxable income is calculated by deducting allowable expenses, tax-free items, and losses from gross business revenue. Income from capital gains, interest, and dividends is also included in the tax base.

Treatment of Tax Losses

• Group A taxpayers can carry forward losses for up to three years.
• Group B taxpayers cannot carry forward losses.
• Loss carry-back is not permitted.
• Group tax relief does not apply in Macau.

Filing Deadlines & Payment Requirements

All businesses must submit an annual tax return to the Macau Financial Services Bureau within the specified timeframes:

Once tax returns are submitted, the Financial Services Bureau issues an assessment notice, prompting businesses to settle their tax obligations.

Penalties for Non-Compliance

• Failure to file or underreport income: Fines range from MOP 100 to MOP 20,000.
• Late payments: Subject to interest charges, which cannot be deducted from taxable income.

Final Thoughts

Understanding Macau’s corporate tax framework is essential for businesses to remain compliant and avoid penalties. Whether your company falls under Group A or Group B, timely filing and payment are critical.

For further assistance or guidance on corporate taxation in Macau, feel free to reach out to our team—we’re here to help!