Attitude toward Foreign Direct Investment
Under the concept of “one country, two systems”, Macau enjoys a high degree of autonomy in economic matters, and its economic system is to remain unchanged for at least fifty years. The GOM maintains a transparent, non-discriminatory, and free-market economy. Macau has separate membership in the World Trade Organization (WTO).
Macau is heavily dependent on the gaming sector and tourism industries. The GOM aims to diversify Macau's economy by attracting foreign investment and is committed to maintaining an investor-friendly environment. Corporate taxes are low with a tax rate of 12 percent for companies whose net profits exceed USD 37,500 (300,000 Patacas). For net profits less than USD 37,500, the tax ranges from three percent to 12 percent. The top personal tax rate is 12 percent; however, the tax rate of casino concessionaries is 35 percent on gross gaming revenue, plus a four percent contribution for culture, infrastructure, tourism, and a social security fund.
In 2002, the GOM ended a long-standing gaming monopoly, awarding two gaming concessions to consortia with U.S. interests. This opening has encouraged substantial U.S. investment in casinos and hotels, and has spurred exceptionally rapid economic growth over the last few years. Macau is positioning itself to be a regional center for gaming, incentive travel, conventions, and tourism.
In 2004, Macau and the PRC implemented a free trade agreement, the Closer Economic Partnership Arrangement (CEPA). The agreement is similar to the Hong Kong-PRC CEPA. Macau’s CEPA currently provides tariff-free access to Mainland China for all Macau-origin products and preferential treatment for 48 service sectors. Since March 2015, Macau and China’s Guangdong Province have implemented an agreement on achieving basic liberalization of trade in services. The agreement has introduced the use of negative list under the CEPA framework that covers 134 service sectors and grants national treatment to Macau’s 58 service industries. In addition, this agreement has offered Macau most-favored treatment -- any CEPA-plus liberalization measures included in the free trade agreements signed by the Mainland China with other countries will be automatically extended to Macau. The framework and content of the agreement serves as a model for basic liberalization of trade in services between Macau and all of Mainland China. With the PRC’s launch of Guangdong Free Trade Zone in March 2015, industry observers mentioned that Macau has strengthened further its cross-border collaboration with Guangdong.
Foreign firms and individuals are free to establish companies, branches, and representative offices without discrimination or undue regulation in Macau. There are no restrictions on the ownership of such establishments. Company directors are not required to be citizens of, or resident in, Macau.
Other Investment Policy Reviews
Macau conducted the Trade Policy Review in May 2013 through WTO.
Laws/Regulations on Foreign Direct Investment
Macau's legal system is based on the rule of law and the independence of the judiciary. Foreign and domestic companies register under the same rules and are subject to the same set of commercial and bankruptcy laws (Decree 40/99/M).
Macau Trade and Investment Promotion Institute (IPIM) is an agency of the GOM with responsibilities of promoting trade and investment activities. IPIM provides one-stop service and notary service for business registration, and it applies all legal and administrative procedures to all local and foreign individuals or organizations interested in setting-up a company in Macau. http://www.ipim.gov.mo/en/services/one-stop-service/handle-company-registration-procedures/
The GOM defines a Small- and Medium-Enterprise (SME) as a company with less than 100 employees. The GOM has tailored-made several financial schemes for SMEs in order to boost their growth. One of the criteria of the schemes is at least 50 percent of company’s capital are owned by Macau residents.
Macau seeks to speed up its economic diversification to transform the city into a world center of tourism and leisure, equipped with convention and exhibition facilities and a service platform for economic and trade co-operation between China and Portuguese-speaking countries. These policies are expected to create business opportunities for domestic and foreign investors.
Limits on Foreign Control and Right to Private Ownership and Establishment
Foreign investors and domestic private entities in Macau have the right to establish and own business enterprises and engage in all forms of remunerative activities.
Since 2001, the GOM has been steadily liberalizing its telecommunications sector. The GOM has already liberalized the mobile phone and internet service markets. In November 2011, Macau Chief Executive Fernando Chui announced plans to liberalize the fixed-line public telecommunications network, which is monopolized by Companhia de Telecomunicações de Macau (CTM) under a concessionary contract which expired at the end of 2011. In June 2013, the GOM granted two licenses to CTM and to MTel Communications Co Ltd (MTel), ending Macau’s 32-year-old fixed-line telephone monopoly. In March 2015, the GOM granted four 4G licenses after six companies submitted bids in November 2014. The licenses are valid for eight years.
Certain residency requirements are imposed on three professional services sectors as described below:
Education - an individual applying to establish a school must have a Macau Certificate of Identity or have the right to reside in Macau. The principal of a school must be a Macau resident.
Newspapers and magazines - applicants must first apply for business registration and register with the Government Information Bureau as an organization or an individual. The publisher of a newspaper or magazine must be a Macau resident or have the right to reside in Macau.
Legal services - lawyers from foreign jurisdictions who seek to practice Macau law must first obtain residency in Macau. Foreign lawyers must also pass an examination before they can register with the Lawyer's Association, a self-regulatory body. The examination is given in Chinese or Portuguese. After passing the examination, foreign lawyers are required to serve an 18-month internship before they are able to practice law in Macau.
The GOM has not mentioned any considerations of privatization programs in recent years.
Screening of FDI
Apart from several economic sectors such as gaming, water supply, electricity supply, cable TV, and public bus services run by private companies under concession contracts from the GOM, Macau has no investment approval procedure for both domestic and foreign investors.
Macau has no agency that reviews transactions for competition-related concerns, nor a competition law. The Commercial Code (Law No. 16/2009) contains basic elements of a competition policy with regard to commercial practices that can distort the proper functioning of markets. The GOM states that the existing provisions are adequate and appropriate given the scale and scope of local economy.