On June 12 2017, a new regime for the exchange of information with foreign entities on tax matters was published in the Macau Official Gazette – Law 5/2017. Subsequently, on June 28 2017, the Executive Order 211-2017 was gazetted, approving the Common Reporting Standard and Due Diligence Procedures. These rules will now govern the exchange of information by Macau SAR in the carrying out of international agreements and conventions to which it is a party on double taxation and/or on prevention of tax evasion.
Under the new regime, which is already applicable, the relevant information will be exchanged by the Macau SAR (i) upon a request received from a foreign contracting country; (ii) at the initiative of the Macau SAR authorities; or, (iii) automatically under the terms and at the relevant intervals foreseen in the applicable international agreements.
The rules on automatic exchange of information apply to financial institutions and offshore entities that provide financial services to persons who are tax residents of foreign contracting countries holding financial accounts in the Macau SAR. Those institutions have to request their (existing and new) clients to provide the necessary information to assess whether they are tax residents of other jurisdictions. The relevant findings have to be subsequently reported to the Macau tax authority for the purposes of their communication to the relevant foreign country.
As a rule, the financial institutions have to inform their clients that the information in respect of their accounts is subject to reporting under this regime and that it will be exchanged with the country of tax residency, for tax purposes.
Different rules and procedures on due diligence will apply, depending on the balance registered in the accounts, on the date of opening of the accounts and on the identity of the client (individual or entity).
(to be continued)