In order to cooperate with the OECD’s framework to combat cross-border tax evasion and promote tax transparency,  the existing Macau offshore company (“MOCs”) regime has already been abolished on 1 January 2021. The offshore business license shall have been expired and all tax benefits for MOCs were revoked on the same date.

It is expected that MOCs will register as ordinary local companies, and will be subject to Macau Income Tax. If MOCs intend to convert their business into one of the existing types of ordinary companies in Macau, they have 180 days from 1 January 2021 (i.e. the due date is  30 June 2021) to make such changes. The MOCs are temporally not required to pay any tax before the due date.

Points to Note

It is common for large multinational corporations (“MNC”) to establish MOCs as the trading companies within the group. Upon the abolishment of MOC regime, they are required to report tax in Macau starting from the year 2021.

It is difficult for MNC to recruit sufficient qualified staff to support the trading operations; yet often the Macau company is actually managed by personnels in other tax jurisdictions (e.g., Hong Kong, the PRC). With the abolishment of offshore regime, MNC should consider whether it is still worthwhile to maintain such trading companies in Macau, considering the potential double taxation arising from permanent establish risk especially with non-DTA partners of Macau.

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