In late December, 2019, a new and consequential step toward fiscal transparency and accountability on par with international standards was decisively taken by the Government of the Macau Special Administrative Region with the approval of Law No. 21/2019, a revision of the Complementary Tax Law.
Under the added provisions, income tax is now owed by any company incorporated in the Macau S.A.R. and classified as a so-called "final parent entity", understood therein as a entity which, being a constituent company of a multinational group, holds, directly or indirectly, sufficient economic interest in one or more of that group's constituent companies such as to warrant taxation in accordance with consolidated financial statements (i.e., financial statements in which the assets, liabilities, returns, expenses, and cash-flows, of the final parent entity and of the remaining constituent companies of the multinational group are presented as belonging to one single economic entity – the final parent entity) and are issued in conformity with accounting and reporting rules of the jurisdiction in which such entity keeps its effective tax residence. Law No. 21/2019 goes still one step further by providing that income tax is still owed when no consolidated financial statements are issued, but ought to be issued, were the final mother entity a publicly traded and owned company. For the purposes of complementary income tax, final parent entities are classified as a Group A tax payer and taxed according to their actual accounting statements.
Further regulation is still necessary for the new provisions to take full effect, especially in regard to final parent entities whose total profits exceed a yet unspecified amount which will act as a catalyst for several additional (and tailor-made) legal obligations, such as providing copies to the Macau Financial Services Bureau of financial statements issued in the jurisdiction of tax residence or keeping the records of incorporation of the multinational group's other constituent companies.
In all, the revised Complementary Tax Law (understood in connection with Law No. 5/2017, regarding the exchange of tax information, also revised on the same date) expresses one step further in Macau's commitment to honor the pledges made in the context of OECD's Action 13 of the Base Erosion and Profit Shifting initiative.