Macau is a former Portuguese colony and was administered by Portugal from the mid-16th century until late 1999 when it was ceded to China. Macau became the second Special Administrative Region after Hong Kong.
In 2002, the government of Macau enacted a law from 2001 which legalized gambling, and offline casinos opened up. Macau’s Internet gambling sector was regulated in 2003. Today, Macau is the gambling center of Asia. Its offshore financial sector is growing but still is nowhere near the size of Hong Kong.
Macau has a long list of legal forms available, allowing for a wide range of liability.
- Unlimited Liability Company (S.N.C.)
- Mixed Liability Company by Quotas (S.C.)
- Mixed Liability Company by Shares (S.C.A.)
- Limited Liability Company by Quotas (L.D.A.)
- Limited Liability Company by Shares (S.A.)
- Limited Liability Company by Sole Owner (S.U.L.)
Unlike Hong Kong, there’s no territorial taxation system in Macau. Worldwide income may be subject to tax.
However, under the Offshore Regime of Macau, companies can be fully tax exempt if they do not operate in MOP currency, do not target Macanese persons, and do not focus on other Macanese companies.
Unlike Hong Kong, where you pay tax depending on the source of income, Macau has taken a different approach of either full tax exemption or full tax liability.
There is no sales tax (VAT) in Macau.
The Offshore Regime creates two types of offshore operations: Offshore Commercial Service Companies and Offshore Auxiliary Services Companies. Both are designated International Business Companies (IBC), but are significantly different from the IBC legislation of Belize, Seychelles, and so on.
The differences between Offshore Commercial Service Companies and Offshore Auxiliary Services Companies lie within their scope of operations. While auxiliary services companies can only perform duties for holding or parent companies, commercial service companies are free to conduct business with anyone. Auxiliary companies pay a lower annual fee—between 4,000 and 10,000 MOP less per year.
All companies in Macau—even those registered under the Offshore Regime—must prepare and file financials. Nonresident companies normally outsource this to a Macanese accounting firm.
The costs of forming a regular or offshore company in Macau are higher than in Hong Kong, but not by much.
Banking in Macau
I have so far never heard of a bank in Macau opening accounts remotely. It probably is possible, but it’s even more restricted than in Hong Kong.
Banking in Macau is not as good as Hong Kong; one big reason is language. While banks in Hong Kong always have staff who speak fluent English (although with an accent), Macanese banks cannot always deliver English-speaking staff. Speaking Portuguese is of little value outside of government interaction. You either need to speak Cantonese, have a translator with you, or be fortunate enough to book a meeting with English-speaking staff. Websites and Internet banking are generally available in English, though.
The biggest banks in Macau are Chinese or local. There are very few non-Chinese foreign banks in Macau, most opting for Hong Kong instead.
While generally open to nonresident persons and locals as well as Hong Kong companies, opening bank accounts for other offshore companies is not quite as easy. Asian companies (Singapore, Labuan, and Brunei) seem to work quite well. Macanese banks have limited experience dealing with offshore companies from other countries.
Living in Macau
Compared to Hong Kong, Macau is not as much of a metropolitan top-modern paradise.
The first thing you see when you get off the ferry from Hong Kong and through customs is the Grand Lisboa hotel and casino building. Macau puts Las Vegas to shame when it comes to gambling.
You then get to the area with picturesque old Portuguese colonial-era buildings standing next to traditional Chinese buildings. These parts of Macau offer a vivid combination of East and West.
However, once you get beyond the sprawling city center, you get into mainstream residential Macau, which compared to Hong Kong looks run-down. The divide between rich and poor is enormous in Macau.
Costs of living in Macau are much lower than Hong Kong, unless you live in the center and near the casinos. Crime is kept well under control, with plenty of police present throughout the territory. Pollution is a problem and, like in Hong Kong, people often times walk around wearing masks over their noses and mouths.
Despite its heritage as a Portuguese colony, it’s hard to find anyone who speaks Portuguese. It’s also hard to find anyone who speaks English outside the central and most tourist areas.
Personal taxation in Macau is lower than in Hong Kong.
Residents are liable for income tax on salary from employment with Macanese companies or salaries paid into Macau, which means that if you work remotely for a foreign company, you pay no tax. This can be used to live and work tax-free in Macau.
The income tax rate in Macau varies from 7% to 12%. The first 120,000 MOP are exempt from tax.
There is no capital gains tax, capital duty, capital acquisitions tax, inheritance tax, wealth, or sales tax.
Macau has an edge over Hong Kong in terms of taxation and lower cost of living, but life there is not as glamorous. Since Macau has far fewer expats—especially from outside of Southeast Asia—and language limitations, assimilation is not as easy as in Hong Kong.