The European Union (EU) listed Macao SAR as a non-cooperative tax jurisdiction at the end of 2017. However, with the support of the Central Government, the SAR Government has been actively communicating with the EU and has committed itself to implement a series of improvement measures to meet relevant international tax cooperation criteria. Later, the EU decided to remove Macao SAR from the list of non-cooperative tax jurisdictions in January 2018. Since it has already undertaken the committed measures, Macao SAR, along with 24 other countries and regions, has been listed as one of the 43 tax jurisdictions that comply with the EU criteria for tax cooperation in the latest EU’s announcement on 12 March 2019.
In the past year, Macao SAR has done a lot of works in the promotion of international tax cooperation. With regard to the extension of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters to Macao SAR, after consulting with the SAR Government, the Central Government has made a statement on the application of the Convention to Macao SAR, and the extension of the Convention to Macao SAR came into effect in September 2018. The SAR Government has also signed the Multilateral Competent Authority Agreement (MCAA) for automatic exchange of financial information in tax matters. On the other hand, Macao SAR officially joined the OECD’s Inclusive Framework on Base Erosion and Profit Shifting (BEPS) in November 2016, and is therefore obliged to undertake measures against tax base erosion and profit shifting activities, as well as undergo relevant reviews. Based on the preliminary conclusion of the OECD, the offshore regime in Macao SAR was considered to be a potentially harmful tax regime which ought to be ended by June 2021. For this reason, the SAR Government has completed all the necessary legal procedures for the “Abolition of Legal Regime of the Offshore Activities” (Law No 15/2018) in 2018. The application for offshore services license was terminated since then, and all existing licenses of offshore services will also be expired starting from 1 January 2021.
Moreover, in order to be in line with the latest international tax cooperation criteria, especially with regard to the Inclusive Framework on BEPS: Action 13 requirements on Transfer Pricing Documentation and Country by Country Reporting, Macao SAR has already commenced its internal legal procedures for the Amendment to the Complementary Tax Regulation. The amendments include: (i) the definition of the ultimate parent entity of a multinational enterprise group; (ii) the obligations and regulations for the provision of consolidated financial information to the tax authorities by the relevant enterprises; and (iii) the spontaneous exchanges of collected information with other countries and regions by the tax authorities, etc. The public consultation of the Amendment to the Complementary Tax Regulation was proceeded at the end of 2018, and the relevant departments are now closely following up the case.