Macau Tax Law

Macau’s tax is relatively simple and low, especially compared to mainland China. It primarily includes taxes related to individuals and businesses, such as professional tax, property tax, and complementary income tax.

I. Taxes Related to Individuals

Taxes for individuals in Macau mainly include the following:

• Professional Tax: Levied on income earned from employment in Macau. Taxpayers are divided into two categories:
  1. Group 1: Employees and casual workers (with taxes withheld and paid by employers).
  2. Group 2: Self-employed individuals (taxed on net profits).
• Property Tax: Levied on rental income from personal real estate.
• Complementary Income Tax: Imposed on other personal income, such as income from business activities, including asset disposals, though many exemptions are available.

Macau’s individual tax system offers several advantages compared to mainland China:

1. Territorial Taxation Principle

Macau only taxes income sourced within its borders. Income earned outside Macau is not subject to taxation. In contrast, mainland China applies a global taxation principle.

2. Exceptionally Low Tax Rates

• The highest professional tax rate in Macau is only 12% (compared to mainland China’s 45% top rate for comprehensive income).
• Property tax is just 6%–8% (versus 20% in mainland China for rental income).
• Complementary income tax is capped at 12% (compared to 35% for individual business income in mainland China).

3. Numerous Tax Incentives

• Professional Tax
  Only 70% of income is taxable (a 30% deduction rate), meaning an income of MOP 200,000 is taxed on only MOP 140,000. Additionally, there is a personal allowance of MOP 144,000 (compared to RMB 5,000 per month in mainland China). In 2019, taxpayers were even eligible for a 70% tax refund, capped at MOP 20,000.
• Property Tax
  Rental income is taxed on 90% of the income (a 10% deduction rate) and allows an additional deduction of MOP 3,500.
• Complementary Income Tax
  Income below MOP 600,000 is exempt from taxation.