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Macau: International tax cooperation

This is a continuation of the update in last month's briefing. The exchange of information by the Macau SAR under Law 5/2017 can finally occur at the authorities' own initiative, irrespective of any request received from a foreign country that is a contracting party to an international agreement or convention on double taxation or on prevention of tax evasion.

This can occur when one of the following set of circumstances is verified: (i) there is reason to believe that another contracting party is losing tax revenue; (ii) the taxpayer has obtained a tax reduction or exemption in the Macau SAR which may increase his/her tax obligation in another contracting party; (iii) a Macau SAR taxpayer and a taxpayer from another contracting party have entered into commercial transactions in a manner that may result in a tax reduction in the Macau SAR, or in the other contracting party, or both; (iv) there is reason to believe that artificial profit distribution is taking place within a group of companies which may result in the payment of less tax; or, (v) when the Macau SAR has information that may allow access by other contracting parties to data relevant to assess the taxpayers' tax obligations.

This procedure can only be applied to individuals or entities in respect of whom the Macau Financial Services Bureau, either in the context of the assessment of their tax obligations or the execution of any tax investigation, has obtained information deemed relevant to the application or enforcement of the tax laws of another contracting party. This is, however, circumscribed to the scope of the international agreement(s) in force between the Macau SAR and the other contracting party.

However, the Macau SAR cannot apply this procedure if any the following sets of circumstances has been verified: (i) when the information may reveal public secrets, or compromise public safety and/or public order, (ii) when the information involves industrial or professional secrets; and, (iii) when the information relates to communications exchanged between attorneys, solicitors or legal representatives and their clients, in the context of pending or potential litigation, or the provision of legal advice.

The Chief Executive is the entity with the competence to decide on the execution of this type of procedure for the exchange of tax information by the Macau SAR.

João Nuno Riquito and Bruno Almeida
Riquito Advogados

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