Macau is a city located on the southern coast of China at the south of Guangdong province. It is situated just about 60 km west of Hong Kong and 145 km southwest of Guangzhou. It has a humid subtropical climate and relies on the freshwater supply of Xijang River. It has a stable company and a good infrastructure.
Macau’s SAR Offshore Law has been in effect since the first of November 1999. It is the Macau Monetary Authority which regulates the offshore business in the city. On the other hand, it is the Macao Trade and Investment Promotion Institution which regulates and supervises the offshore non-finance business.
Requirements for Operating Offshore Service Business
Any investor who wishes to put up an offshore company in Hong Kong must first obtain an approval from the IPIM. There are some rules which investors must abide by in order to be eligible for operation.
- To target only non-Macao residents as customers
- To use only non-Macao currency in all activities
- To focus on non-Macao markets
It is a must for investors to register an offshore company according to the commercial laws of the Macao SAR. The names of offshore institutions must include the phrases “Macao Offshore Commercial” or “Macao Offshore Auxiliary”.
Tax Incentive for Offshore Companies
In Macau, any offshore institution is exempted from the following taxes:
- Income tax
- Industrial tax
- Stamp duties
Non-Macao residents who are employed by companies as managers and specialized technicians are exempted from salary tax for the first three years of their employment.
Setting Up an Offshore Institution
Offshore institutions can be formed as a branch or subsidiary in Macau. There are differences between the two. A subsidiary is a separate legal entity which has its own memorandum and articles of association. It has to bear its own legal liability. On the other hand, a branch is not a separate legal entity. It bears its own liability.
The minimum capital required of an offshore institution in Macau is MOP25,000. It has to have at least one director and one shareholder which can be an individual or a corporation. However, if the director is a corporation there is a need to appoint an individual to carry out the duties of a director.
Offshore Services which Can Be Operated in Macau
There are two types of offshore institutions which can be established in Macau and they are offshore auxiliary services and offshore commercial services. Some of the following services which can be offered are:
- Tests and technical analysis
- Software consultant
- Data processing
- Hardware consultant
- Research and development activities