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Macau: Offshore activities to end?

Offshore activities in Macau are ruled by Decree-Law 58/99/M (the offshore regime). Under this Law, such activities are categorised into financial and non-financial offshore operations, under the supervision of the Monetary Authority of Macau (AMCM) and the Macau Trade and Investment Promotion Institute (IPIM), respectively.

However, as from January 1 2021, it may no longer be possible to operate offshore businesses in Macau. The Macau government has recently submitted to the Legislative Council a bill proposing the revocation of Decree-Law 58/99/M in its efforts to comply with the OECD's standards regarding the treatment of offshore institutions, combating cross-border tax evasion, and improving tax transparency and tax fairness.

The revocation of the offshore regime will be effective immediately, but institutions already operating in the Macau SAR will continue to be allowed to do so until December 31 2020 (transition period).

Under the existing regime, offshore entities are exempt from a wide range of taxes, such as stamp duty on the purchase of movable or immovable property and income tax on intellectual property. Non-residents working as managers or specialised technicians in offshore entities are also exempt from income tax for the first three years of their employment in offshore institutions located in the Macau SAR. Such benefits will no longer apply during the transition period in respect of property purchased or personnel authorised to live in Macau, once the new law enters into force.

It is estimated that around 360 offshore institutions, with a total of 1,700 personnel will be affected by the revocation of the offshore regime. However, the draft bill provides some incentives to encourage those institutions to continue their activities in Macau. For example, if an institution changes its name and scope of business within the 90 days following the expiry of its operating permit, it will be exempt from the respective stamp duties, tax, and notarisation and registration fees.

João Nuno
Mandy Fu

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