Introduction

In the advent of the transfer of sovereignty over Macau from Portugal to China, the then-Macau Territory was bestowed with an offshore regime (Decree-Law 58/99/M, October 18 1999, effective November 1 1999) boasting a comprehensive list of 20 offshore activities of commercial and auxiliary services allowed in Macau, including:

  • companies authorised to operate in one of the 20 activities benefiting from financial incentives (eg, exemptions(1) from income tax, industrial tax and stamp duty in relation to certain incidents); and
  • managers and high-level specialised staff authorised to establish residence in Macau, under the terms of the applicable law, benefiting from professional tax till December 31 of the third year.(2)

Being close to Hong Kong and mainland China, Macau initially attracted many businesses wishing to set up offshore activities. However, in 2005 the allure of the offshore regime was greatly reduced for new investors(3) after a decision by Macau's chief executive(4) regarding the removal of the following 12 activities from the list:

  • commercial and service agent activities;
  • overseas selling activities;
  • trade information dissemination;
  • documentation service activities;
  • call centre and customer support activities;
  • investigation and security;
  • legal activities;
  • accounting, auditing and fiscal consultation;
  • management and business consultation;
  • architectural, engineering and related activities;
  • packaging; and
  • training programme activities.

Since then, the offshore regime has been long neglected by new investors. According to Statistics and Census Service press releases regarding quarterly company statistics, the number of existing commercial offshore companies has been slowly on the decline:

End of year

Number of commercial offshore companies

Reduction, year on year

2014(5)

480

9

2015(6)

472

8

2016(7)

453

19

Recharged

Just as many began to believe that offshore activity was a sunset industry, Macau's mandate to become a commercial and trade cooperation service platform between China and Portuguese-speaking countries came into play.

On September 18 2017 the Dispatch of the Chief Executive 323/2017 was published in the Official Gazette, citing that "considering the necessity to update the list of the offshore activities of commercial and auxiliary services allowed in the Macau Special Administrative Region", and "on the proposal of the Macao Trade and Investment Promotion Institute", the chief executive of Macau decreed that:

"the list of the offshore activities of commercial and auxiliary services attached to Dispatch 236/GM/99, October 29, as amended by Dispatch of the Chief Executive 205/2005, is substituted with the list attached to the present dispatch and of which it forms an integral part."

As a result, the list now comprises:

  • hardware consultation;
  • software consultation;
  • data processing;
  • database-related activities;
  • back-office activities;
  • research and development activities;
  • tests and technical analysis activities;
  • management and administration of ships and aircraft; and
  • trade in goods and services between China and Portuguese-speaking countries (newly allowed).

Although the exact extent of the new addition regarding trade in goods and services between China and Portuguese-speaking countries is yet to be tested and its effects assessed, it is arguably one of the single most favourable policies that the government has put forth for the development of Macau in order to become a commercial and trade cooperation service platform between China and Portuguese-speaking countries.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.

For further information on this topic please contact Pedro Cortés or Calvin Tinlop Chui at Rato, Ling, Lei & Cortés Advogados by telephone (+853 2856 2322) or email (cortes@lektou.com or chui@lektou.com). The Rato, Ling, Lei & Cortés Advogados website can be accessed at www.lektou.com.

Endnotes

(1) Article 12(1) of Decree-Law 58/99/M, October 18 2017, see http://bo.io.gov.mo/bo/i/99/42/declei58_en.asp#a12.

(2) Article 12(5) of Decree-Law 58/99/M, October 18 2017, see http://bo.io.gov.mo/bo/i/99/42/declei58_en.asp#a12.

(3) The companies, having been duly authorised to exercise offshore activities, are not affected by subsequent amendments to the list and can continue to operate within their scope of activities.

(4) Dispatch of the Chief Executive 205/2005, see http://bo.io.gov.mo/bo/i/2005/24/despce.asp#205.

(5) Company statistics for the fourth quarter 2014, see www.gcs.gov.mo/showNews.php?PageLang=C&DataUcn=85875.

(6) Company statistics for the fourth quarter 2015, see www.gcs.gov.mo/showNews.php?DataUcn=96698&PageLang=E.

(7) Company statistics for the fourth quarter 2016, see www.gcs.gov.mo/showNews.php?DataUcn=108540&PageLang=E.