Double taxation can occur in international trade when the same income is taxed in two different countries.
In Macau, according to Law no. 2/2003, when, as a result of the application of tax laws of different jurisdictions, situations of double taxation arise on the same taxpayer, the Chief Executive must adopt the necessary measures for the respective tax regularization and to conclude regional or international agreements aimed to avoid double taxation.
Thus, Macau has signed international and regional Conventions to avoid double taxation and to prevent tax evasion in respect of income tax.
Macau has signed the following Treaties on double taxation:
- Convention between the Macau and Portugal;
- Convention between the Macau and the Republic of Mozambique;
- Convention between Mainland China and Macau;
- Convention between Macau and the Government of the Republic of Cape Verde;
- Convention between Macau and Taiwan; and
- Convention between Macau and Belgium.
In these treaties, signatory nations agree to limit their taxation of international business in an effort to increase trade between the two countries and also to avoid double taxation issues.
All Conventions are based largely on the Organization for Economic Cooperation and Development (OECD) and United Nations models for double taxation treaties.
According to the Macau Tax Department, it is expected negotiations with Vietnam and Hong Kong SAR on double tax.
Moreover, Macau has entered into several Tax Information Exchange Agreements with other countries in order to promote transparency and exchange of information for tax purposes.