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.
- Macau is considered a tax haven because of its tax laws and policies.
- Macau also is home to a thriving casino and gambling culture.
- Macau, like Hong Kong, is a special administrative region (SAR) of greater China that operates under the “One Country, Two Systems” principle.
- Macau does not tax foreign earnings, however residents of the SAR are subject to personal income tax.
Citizens and foreigners who establish residency in Macau enjoy tax rates that are significantly lower than those levied in other developed Asia-Pacific nations such as Japan. Beneficial tax rates also extend to citizens and foreign nationals who work in the city. Macau’s nominal per capita GDP of $81,151 was among the highest in the world, as of 2019, trailing only Luxembourg, and Switzerland. While foreigners usually cannot become citizens, they can gain residency by investing in the local economy. Foreign earnings are not taxed, but residents are taxed on income earned from Macanese companies. The first 144,000 MOP earned is exempt from personal taxation, after which the top tier is taxed at 12%. Non-resident rates are identical to residents’ rates of taxation, but non-residents are subject to a 5% minimum tax rate.
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 are levied against transfers of tangible or intangible property.
Similar to Hong Kong, the One Country, Two Systems allows Macau broad but limited autonomy in most of its governing and economic activities.
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 to 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.
Macau's Gambling Industry
Macau is reminiscent of Las Vegas because of its tourism and gaming industry. The region's GDP has been supported largely by its casinos and entertainment industry. Foreign casinos were first allowed in Macau in 2003, and the industry exploded with the region exceeding Las Vegas as a gambling destination. Largely because of casinos, the GDP of Macau was $7 billion in 2002 and reached $55.1 billion in 2018, according to World Bank statistics.
However, Simon Lewis of Time magazine reported in 2016 that the economy had shrunk by more than 20% after a crackdown by the Chinese President Xi Jinping on corruption and money laundering. When China tightened rules on money exiting the mainland, Macau’s tax base, which was largely made up of casino revenues, began to disappear, and the economy has suffered as a result. Still, Macau is looked to