Macau saves 800 million renminbi with an agreement with Mainland China to avoid double taxation

29 November 2019

Macau is expected to save at least 800 million renminbi (US$114 million) in tax with the signing of the 4th protocol on the agreement with Mainland China to avoid double taxation and prevent income tax evasion, said the Macau Monetary Authority (AMCM).

According to the AMCM, this saving is due to the fact that the income earned by the government of the Macau Special Administrative Region in Mainland China “is exempt from the payment of a 10% income tax” after the new tax protocol went into force.

This tax exemption applies to investment projects under the “Guangdong-Macau Development Cooperation Fund” (Guangdong-Macau Fund) in which the territory has invested 20 billion renminbi as well as any projects of a similar nature.

“Thus, within the framework of the value and timeframe of the Guangdong-Macau Fund’s investments, the tax benefits accrued will amount to about 800 million renminbi,” the AMCM statement said.

This tax benefit granted by the State minimises the tax costs borne by the MSAR government for investments in Mainland China, as well as enhancing the effective return of the territory’s Financial Reserve investments.

It also sets out the State’s attention and assistance to the MSAR, and this initiative supports Macau’s participation in the construction of the Guangdong-Hong Kong-Macau Greater Bay, thereby promoting the integration of the territory in the national development framework.

The Guangdong-Macau Fund has, according to its official schedule, completed the subscribed holdings, and these investments have a predetermined annual return of 3.5% of paid-up equity interest.

Macau will also receive an additional percentage if the total income of the Fund exceeds a certain income limit.

The Guangdong-Macau Fund was established in June 2018 by the Government of the Macau Special Administrative Region, in conjunction with Guangdong Province, and the 4th protocol related to the agreement with Mainland China to avoid double taxation and prevent income tax evasion was signed on Thursday in Macau. (Macauhub)