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‘Y MACAO’: More than just a ‘Profit Tax!’

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image Luiz F. da Silva Pedruco in ‘Y MACAO’: A forthnightly column discussing the ins & outs of doing business in Macau

The Macau Complementary Income Tax Regulation (Regulamento do Imposto Complementar de Rendimentos) was first introduced in 1964 under Legislative Diploma No. 1635, and subsequently revised with the introduction of Decree-Law 7/77/M.
This follows the similar model adopted in Portugal in 1925 under Law No. 4984. This Complementary Tax was abolished in Portugal in 1975.
The need to create such Tax was due to deficiencies in the existing 3 taxes, namely Industrial Tax (Regulamento de Contribuicao Industrial), Property Tax (Regulamento de Contribuicao Predial Urbano.) and Professional Tax. (Regulamento do Imposto Professional), hence the word Complementary, that is “To Complement the 3 existing taxes”.
In 1978 with the approval of the Law No. 21/78/M all previous Legislative Diplomas as well as Decree-Law 7/77/M were abolished and replaced by this new law.
Since January 1, 1979, this Law remains applicable in Macau, with minor alterations.

What exactly is Complementary Income Tax?
Why is it more than just a Profit Tax?

Complementary Income Tax is the tax payable on Global Income ( Total Income –Relevant Charges) by all Individuals and Companies that derived their Income from Macau irrespective of their place of abode or the place of their registered office.
Deductions from Global Income include Dividends paid by Incorporated Commercial and Civil Companies as well as the Income derived from Rental of Urban Buildings (Income paid under the Property Tax (R.C.P.U.).

Note 1- An article will be written about this Tax
at a later date.

Who pays Complementary Income Tax?
1-Individuals who do not have business activities and receive Income or Gains such as:-
Commissions, brokerage fees, profit from sale of assets (Including real estate), bank interest, dividends etc.
2-Incorporated Companies deriving Income or Gains as per above as well as Income from their normal course of business.

A note of caution for users of the current Complementary Income Tax Regulation (R.I.C.R.) .

Users will find it difficult to reconcile some of the discrepancies, between the current Complementary Income Tax Regulation that was modeled on the Official Accounting Plan (POC) and Form for the Declaration of Income for Group A (M/1) Mod. 15 both now Superseded by Macau International Financial Reporting Standards (M.I.F.R.S.) and the Mod. 359 for the Declaration of Income for Group A (M/1)
Last but not Least is, when consulting the Complementary Income Tax Regulation and other Tax Regulations one Must always refer to the Government Annual Budget Law in Articles related to Fiscal Incentives.

In the next article we will talk about Taxpayers that are subject to Group A or Group B declaration under the Complementary Income Tax Regulations (R.I.C.R.).

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*Luiz Pedruco is an Australian Expat. CPA and registered auditor with over 200 years of family history in Macau and has for 26 years focused in helping expats. setting up businesses in Macau. If you have any queries or would like to discuss further the topic of this article or any other matters relating to expats doing business in Macau feel free to e-mail me at lp@cpamacao.com or visit my website www.cpamacao.com
Any comments or feedback on this column are welcome.



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