Economic Overview
Since opening up its locally-controlled casino industry to foreign competition in 2001, Macau has attracted tens of billions of dollars in foreign investment, transforming the territory into one of the world’s largest gaming centers. Macau’s gaming and tourism businesses were fueled by China’s decision to relax travel restrictions on Chinese citizens wishing to visit Macau. In 2016, Macau’s gaming-related taxes accounted for more than 76% of total government revenue.
Macao had a strong economic growth on behalf of tourism from mainland China and the gaming sectors. In the late years, this city of 646,800 hosted nearly 30.7 million visitors/ year. Almost 67% came from mainland China.
Main Sectors in Macau
Tourism and gambling
Tourism is the backbone of Macau’s economy, and much of it geared towards gambling, which was legalized in the 19th century and has since been the linchpin of the economy and an important source of revenue for the government. Macau is currently rated as one of the world’s top tourism destinations by the World Tourism Organization.
Manufacturing
Macau’s manufacturing industries emerged in the first few decades of the 20th century, which mainly consisted of junk building, factories for matches, firecrackers and incense. Modern industries, however, did not take off until the 1970s when the textiles and garments industry was rising rapidly, while other light industries such as plastics, electronics, toys, and artificial flowers also experienced respectable growth.
Banking
Macau is an offshore financial center, a tax haven, and a free port with no foreign exchange control regimes. The offshore finance business is regulated and supervised by the Monetary Authority of Macao, while the regulation and supervision of the offshore non-finance business is mainly controlled by the Macau Trade and Investment Promotion Institute.
Construction
Lately, the construction sectors in Macau engaged 45,368 people. The value of construction was MOP78.15 billion, in which MOP66.88 billion belong to the private sectors. The intermediate consumption was MOP61.03 billion and labor cost was MOP11.35 billion.
Media
Macau has reportedly the highest “media density” in the world – nine Chinese-language dailies, three Portuguese-language dailies, two English-language dailies and about half a dozen Chinese-language weeklies and one Portuguese-language weekly.
Taxes in Macau
Macau, known as the “Las Vegas of Asia,” is considered a tax haven for its advantageous personal and corporate tax structure. Residents and non-residents benefit from ultra-low taxes levied against professional and business income. Situated on the southern coast of China, Macau is the country’s only jurisdiction providing legalized gambling.
A Portuguese colony until 1999, Macau maintains its own stable currency, the Macanese pataca (MOP), and retains political autonomy with separate executive, legislative and judicial powers.
Professional tax rates
The professional tax rates are progressive and cumulative up to a maximum rate of 12%.
Personal Income Tax Rate
In Macau, the Personal Income Tax Rate is a tax collected from individuals and is imposed on different sources of income like labor, pensions, interest and dividends and it consists on 12%.
Property taxes accrue from ownership of all residential, commercial and industrial properties and are dependent upon assessed value or actual rental income, whichever is higher. Rental income is taxed at 10%, and a 6% rate applies to assessed value. There is no inheritance, gift or capital gains tax in Macau, but stamp duties between 1.05 and 5.25% are levied against transfers of tangible or intangible property.
Corporations benefit from conducting business on the peninsula, as capital gains and corporate income are taxed at significantly lower rates than in European nations and the United States. The preferential tax treatment attracts numerous businesses, the majority of which are casinos that comprise a large percentage of Macau’s GDP.
With respect to corporate taxes, the first 600,000 MOP is tax exempt. Thereafter, income exceeding the exempt threshold is taxed at a top rate of 12%. Both residents and non-residents are treated equally with regard to corporate taxation. All profit earned is taxed within the Macau special administrative region. Corporate entities are separated into two groups.
Group A companies must adhere to proper accounting measures and maintain capital levels equal or greater than 1,000,000 MOP.
Group B companies are either first-time filers or those entities that do not meet the capital requirements of group A businesses. Group B organizations are taxed on assessed profit measures, while group A entities are levied on certified tax returns submitted to the Macau Finance Bureau.
Investing in Macau
Macau allows freehold ownership of real estate, meaning foreigners also can own a property on a permanent basis.
Real estate prices in Macau are lower than only about half Hong Kong’. They’re by no means cheap at US$14,000 per square meter on average.
Investing in Macau gives more potential for return because of this. Just understand that most opportunities in Macau rely on the tourism and gambling sectors – whether directly or indirectly.
The Macau Monetary Authority (AMCM) pledged that the government will improve the system of fiscal reserves investment, in particular by enhancing the return on investment by continuously optimizing investment strategies such as participation in regional co-operation projects.
Trade is a very important aspect of Macao’s economy; the joined estimation of fares and imports measures up to 110 percent of GDP. There are no taxes on general imports. Nontariff obstructions block some exchange. All in all, administration arrangements don’t fundamentally dissuade remote speculation. The managing an account overwhelmed monetary division gives simple access to financing. Capital markets stay immature.