Government proposes to lower corporate tax

(Macao – 3 June 2005)The Executive Council today discussed the city’s tax structure and proposed to reduce corporate tax to give a relief to small and medium sized enterprises (SMEs). An amendment bill, to be submitted to the Legislative Assembly for discussion and approval, will propose increasing the exemption of corporate tax from 20,000 Patacas to 32,000 Patacas, backdated to the 2004 fiscal year. Taxable profits and bands suggested were: Taxable profits (Patacas) Tax rate
0 -- 32,000 0%
32,001 -- 65,000 3%
65,001 -- 100,000 5%
100,001 -- 200,000 7%
200,001 -- 300,000 9%
300,000 above 12% The reduction would reduce the government’s revenue from corporate tax by 128 million Patacas in 2004, said spokesman for the Executive Council, Mr Tong Chi Kin. But he said he believed overall revenue would not dramatically fall because of increased economic activities in the year. Under the new rates, according to data of taxpayers in 2003, 10,000 businesses exempted among some 30,000 taxpayers; some 2,700 would enjoy a 30%-50% reduction, some 17,000 would pay less than 50% of what they were paying. The bill, which would be submitted to the Legislative Assembly for discussion and approval, would not only bring advantages to the community, but also lessen the tax burdens of the SMEs, said Mr Tong.