Macao Legal Landscape | Introduction to Macao's Legal System (VI) - Legal and Practical Analysis of Investment in Macao

(Venetian Macao, Photo: Li Zhefan)

Macao adopts a non-discriminatory access policy for foreign investment. Except for specific sectors like gambling and finance, foreign and local capital enjoy equal legal standing. This principle is clearly stated in the Macao Commercial Code and Commercial Registration Code, meaning mainland companies can invest in Macao by establishing subsidiaries, joint ventures, or through mergers and acquisitions without needing additional approvals. For instance, investments in manufacturing and technology services only require commercial registration to begin operations, while the financial sector needs a license from the Macao Monetary Authority (AMCM), and the gambling industry requires approval from the Chief Executive and compliance with the Legal System for Casino Lucky Gaming Operations. This differentiated regulatory model ensures market openness while maintaining economic order through industry-specific rules.

Macao implements a non discriminatory access policy for foreign investment, and except for specific industries such as gambling and finance, foreign investment and local capital enjoy equal legal status. This principle is clearly reflected in the Macao Commercial Code and the Commercial Registration Code, which means that mainland companies can invest in Macao through the establishment of subsidiaries, joint ventures, or mergers and acquisitions without additional approval. For example, investments in industries such as manufacturing and technology services only need to complete commercial registration to operate, while the financial industry needs to apply for a license from the Macao Monetary Authority (AMCM), and the gambling industry needs to be approved by the Chief Executive and comply with the "Legal System for Casino Lucky Gaming Operations" - this differentiated regulatory model not only ensures market openness, but also maintains economic order through special industry rules.

The process for mainland companies to establish a company in Macao is streamlined and standardized: First, three alternative names including “Limited Company” (Lda.) or “Share Company” (S.A.) must be submitted to the Commercial and Real Estate Registration Bureau (CRBC); approval is valid for 60 days. Then, the company’s articles of association, shareholder identification, and other documents must be authenticated by a Macao notary public; foreign documents require The Hague Apostille or consular legalization. After submitting the notarized documents, the CRBC issues a Business Registration Certificate within 5–10 working days. The minimum registered capital is MOP 25,000, with no requirement for actual payment. Finally, a taxpayer number must be obtained from the Department of Finance ( DSF ), and supplementary income tax (corporate income tax) and occupational tax registration must be completed.

The process for mainland companies to establish a company in Macao is convenient and standardized: firstly, they need to submit three alternative names containing " Limited Company " (Lda.) or "Limited Liability Company" (S.A.) to the Commercial and Real Estate Registration Bureau (CRBC), with a validity period of 60 days for approval; Subsequently, the company's articles of association, shareholder identification documents, and other documents need to be authenticated by the Macao Notary Public Office, while foreign investment documents need to be authenticated by The Hague or notarized by the embassy or consulate; After submitting the notarized documents, CRBC will issue a Business Registration Certificate within 5-10 working days, with a minimum registered capital of MOP 25000 and no need for actual payment; Finally, it is necessary to apply for a taxpayer number from the Department of Finance (DSF) and complete the registration of supplementary income tax (corporate income tax) and occupational tax.

Furthermore, Macao's Legal System for Investment Residency allows investors with investments exceeding MOP 1 million (e.g., real estate, tangible assets) to apply for residency, along with their management team and immediate family. The CEPA Investment Agreement between the mainland and Macao guarantees national treatment, most-favored-nation treatment, and dispute resolution mechanisms, providing international legal protection for mainland investments in Macao and further enhancing its attractiveness.

In addition, Macao's "Legal System for Investment Residency" stipulates that investors with an investment amount exceeding MOP 1 million (such as real estate, tangible assets, etc.) can apply for residency rights, and their management team and immediate family members can also accompany them. The "CEPA Investment Agreement" signed between the mainland and Macao clarifies national treatment, most favored nation treatment, and dispute resolution mechanisms, providing international legal protection for mainland enterprises' investments in Macao and further enhancing investment attractiveness.

(Senado Square, Photo: Li Zhefan)

Mainland enterprises have diverse investment options in Macao, each with unique compliance requirements. For direct investment, wholly-owned subsidiaries are suitable for long-term strategies but require a local resident or permit holder as the legal representative. Joint ventures with local Macao businesses mitigate policy risks; the joint venture agreement must clearly define equity shares, profit distribution, and decision-making processes. For example, a joint venture between a Zhuhai technology company and a University of Macao incubator leveraged Macao's research resources and mainland market access to develop AI education products, benefiting from the Hengqin Cooperation Zone's "double 15%" corporate income tax incentive, showcasing the synergistic advantages of this model.

Mainland enterprises have diverse investment forms in Macao, and each path has its own unique compliance points. In direct investment, wholly-owned subsidiaries are suitable for long-term strategic layout, but a local resident or holder of a residence permit must be designated as the legal representative; Joint ventures reduce policy risks by collaborating with local enterprises in Macao. At this point, it is necessary to clarify the equity ratio, profit distribution, and decision-making mechanism in the joint venture agreement. For example, a joint venture between a technology company in Zhuhai and an incubation enterprise of the University of Macao fully utilized Macao's scientific research resources and mainland market channels to develop artificial intelligence education products, and successfully enjoyed the "Double 15%" corporate income tax preferential treatment in the Hengqin Cooperation Zone, demonstrating the synergistic advantages of the joint venture model.

Compared with direct investment, equity mergers and acquisitions represent another important method, but their process is more complex, requiring consideration of multiple aspects such as due diligence, transaction structure design, and regulatory approval. The due diligence phase requires a comprehensive review of the target company's asset ownership, debt status, contract performance, and litigation risks. For example, when a mainland energy company acquired a Macao power company, it focused on verifying the franchise rights and environmental compliance of its transmission and distribution network to ensure the investment target had no potential legal defects; When drafting transaction documents, the equity acquisition agreement must specify the transaction consideration, payment method (e.g., installment payments), transitional arrangements, and liability for breach of contract. When Macao Gaming Holdings acquired Shun Tak Holdings Limited's Zhuhai property for 724 million yuan, it agreed to pay in seven installments and set a deferred payment interest clause to mitigate payment risks through detailed clauses; In the approval and registration process, if the merger results in a market share exceeding 30%, anti-monopoly review must be applied for with the Macao Economic Bureau, and documents such as the equity transfer contract and shareholder meeting resolution must be submitted to CRBC. The equity change registration can be completed within 10 working days.

Compared with direct investment, equity mergers and acquisitions, as another important way, have a more complex process that requires consideration of multiple aspects such as due diligence, transaction structure design, and regulatory approval. During the due diligence stage, a comprehensive review of the target company's asset ownership, debt status, contract performance, and litigation risks is required. For example, when a mainland energy company acquired Macao Power Company, it focused on verifying the franchise rights and environmental compliance of its transmission and distribution network to ensure that the investment target has no potential legal defects; When drafting the transaction documents, the equity acquisition agreement needs to specify the transaction consideration, payment method (such as installment payment), transitional period arrangement, and breach of contract liability. When Macao Gaming Holdings acquired the Zhuhai property of Shun Tak Holdings Limited for 724 million yuan, it agreed to pay in seven installments and set a deferred payment interest clause to avoid payment risks through refined clauses; In the approval and registration process, if the merger results in a market share exceeding 30%, it is necessary to apply for anti-monopoly review to the Macao Economic Bureau, and submit documents such as the equity transfer contract and shareholder meeting resolution to CRBC. The equity change registration can be completed within 10 working days.

It is worth noting that mergers and acquisitions in specific industries face additional restrictions: in the financial industry, acquiring a Macao bank requires AMCM approval, a paid-in capital of no less than MOP 10 million, and compliance with capital adequacy requirements. The case of Industrial and Commercial Bank of China acquiring 79.93% equity of Seng Heng Bank and integrating branch resources to establish ICBC Macao highlights the resolution of differences in regulatory rules and system integration between the two places; The gambling industry limits foreign ownership to 30% and requires a "suitability" review by the Chief Executive. These rules aim to maintain industry stability and public interest.

It is worth noting that there are additional restrictions on mergers and acquisitions in special industries: in the financial industry, the acquisition of a Macao bank requires approval from AMCM, with a paid in capital of not less than MOP 10 million and meeting the capital adequacy requirement. The case of Industrial and Commercial Bank of China acquiring 79.93% equity of Seng Heng Bank and integrating branch resources to establish ICBC Macao focuses on solving the differences in regulatory rules and system integration between the two places; The gambling industry is limited to 30% foreign ownership and requires a "suitability" review by the Chief Executive. These rules aim to maintain industry stability and public interest.

(Photography: Li Zhefan)

Macao's low tax rates and cross-border tax arrangements offer mainland businesses significant tax planning opportunities. Making effective use of these policies can significantly reduce overall costs. Macao's main taxes and rates reflect the principle of light taxation: supplementary income tax uses a progressive rate, exempting annual profits ≤ MOP 600,000, and taxing excess profits at 12%, far lower than the 25% corporate income tax rate in mainland China; For stamp duty, the equity transfer rate is 0.1%, and the real estate transaction rate is 3%-6% (depending on value); Occupational tax exempts employee income ≤ MOP 144,000, taxing excess income at 7%-12%. These tax rates significantly reduce the operational burden on businesses.

The low tax rate advantage and cross-border tax arrangements in Macao provide vast tax planning space for mainland enterprises, and the rational use of these policies can significantly reduce overall costs. The main tax categories and rates in Macao reflect the principle of light taxation: the supplementary income tax adopts a progressive tax rate, exempting annual profits ≤ MOP 600000, and imposing a 12% tax on excess profits, which is much lower than the 25% corporate income tax rate in mainland China; In terms of stamp duty, the tax rate for equity transfer is 0.1%, and the tax rate for real estate transactions is 3% -6% (depending on value); The occupational tax system exempts employees whose income is less than or equal to MOP 144000 from taxes, and imposes a tax rate of 7% -12% on the excess. These tax rates greatly reduce the operational burden on enterprises.

In CEPA Under the CEPA framework, tax benefits are further extended: Macao-origin goods exported to the mainland enjoy zero tariffs, such as Macao-made food and textiles, reducing cross-border trade costs; In the service trade sector, Macao service providers enjoy lower barriers to entry in mainland China. For example, construction companies can undertake mainland projects through CEPA qualification certification, expanding their business scope while reducing compliance costs.

Under the CEPA framework, tax incentives have been further extended: Macao origin goods exported to the mainland can enjoy zero tariffs, such as food and textiles manufactured in Macao, reducing cross-border trade costs; In the field of trade in services, Macao service providers can enjoy lower entry barriers in mainland China. For example, construction companies can undertake mainland projects through CEPA qualification certification, expanding their business scope while reducing compliance costs.

Cross-border tax optimization strategies offer businesses flexible choices: using Hengqin Cooperation Zone policies, businesses registered and operating in Hengqin can enjoy a 15% corporate income tax reduction, and profits from overseas business conducted through a Macao subsidiary can be returned through dividend distribution and subject to lower withholding tax; According to the Double Taxation Avoidance Arrangement between Mainland China and Macao, the withholding tax rate for dividends, interest, and royalties can be reduced to 5%-10%, avoiding double taxation of the same income in both regions; Establishing a cross-border two-way RMB fund pool through a Macao company allows for unified allocation of domestic and foreign funds, reducing financing costs and improving fund utilization efficiency.

The cross-border tax optimization path provides flexible choices for enterprises: by utilizing the policies of the Hengqin Cooperation Zone, enterprises registered and operating in Hengqin can enjoy a 15% corporate income tax discount, and their overseas business profits carried out through the Macao subsidiary can be returned through dividend distribution and subject to lower withholding tax; According to the Double Taxation Avoidance Arrangement between Mainland China and Macao, the withholding tax rate for dividends, interest, and royalties can be reduced to 5% -10%, avoiding duplicate taxation of the same income in both regions; By establishing a cross-border two-way RMB fund pool through a Macao company, it is also possible to achieve unified allocation of domestic and foreign funds, reduce financing costs, and improve the efficiency of fund utilization.

(Macao Londoner, Photography: Li Zhefan)

The transaction of China Three Gorges International acquiring a 21.2% stake in Macao Electric Power aims to enter Macao's green energy market and contribute to Macao's "carbon neutrality" goal. The legal challenges encountered mainly involve anti-monopoly review and cross-border regulatory coordination: To pass the anti-monopoly review, the company must prove that the transaction will not lead to market monopoly, ultimately obtaining approval through detailed market share analysis and competitive impact assessment; Cross-border regulatory coordination involves multi-faceted compliance requirements from the National Development and Reform Commission, Macao Economic Bureau, and the Hong Kong Stock Exchange, requiring simultaneous fulfillment of different regulatory bodies' approval standards. In terms of tax strategy, the company leverages the tax arrangements between Macao and mainland China to repatriate dividend income at a lower tax rate, while simultaneously reducing financing costs through cross-border RMB loans in the Hengqin Cooperation Zone, achieving dual optimization of taxation and financing.

The transaction of China Three Gorges International Corporation acquiring 21.2% equity of Macao Electric Power aims to enter Macao's green energy market and contribute to Macao's "carbon neutrality" goal. The legal challenges faced during the process mainly manifest in two aspects: anti-monopoly review and cross-border regulatory coordination. In order to pass the anti-monopoly review, enterprises need to prove that the transaction will not lead to market monopoly, and ultimately obtain approval through detailed market share analysis and competitive impact assessment; Cross border regulatory coordination involves multidimensional compliance requirements from the Mainland Development and Reform Commission, Macao Economic Bureau, and Hong Kong Stock Exchange, which need to simultaneously meet the approval standards of different regulatory entities. In terms of tax strategy, enterprises utilize the tax arrangements between Macao and mainland China to repatriate dividend income at a lower tax rate, while reducing financing costs through cross-border RMB loans in the Hengqin Cooperation Zone, achieving dual optimization of taxation and financing.

In the Macao Gaming Holdings acquisition of Shun Tak Group's Zhuhai property, the transaction structure involves acquiring the Hengqin office building and retail property for 724 million yuan, with plans to convert it into a three-star hotel, payable in seven installments. Legal aspects focus on real estate transaction compliance and use change approvals: Real estate transactions require simultaneous handling of mainland China's real estate ownership changes and Macao company equity changes, involving the application of laws in both regions and document notarization, ensuring all documents comply with both regions' legal requirements; Converting commercial property to hotel use requires applying for planning adjustments from the Zhuhai Hengqin Management Committee, obtaining approval through sufficient demonstration of the project's compliance and social value. In terms of tax benefits, holding properties through Macao companies allows for optimizing rental income using Macao's low tax environment, while enjoying special subsidies from the Hengqin Cooperation Zone for the hotel industry, significantly improving investment returns.

In the case of Macao Gaming Holdings acquiring the Zhuhai property of Shun Tak Group, the transaction structure is to acquire the Hengqin office building and retail property for 724 million yuan, with plans to convert it into a three-star hotel, and pay in seven installments. The legal focus is on compliance and approval of changes in the use of real estate transactions: Real estate transactions require simultaneous registration of changes in the ownership of real estate in mainland China and changes in the equity of Macao companies, involving the application of laws in both regions and document notarization. It is necessary to ensure that all documents comply with the legal requirements of both regions; To convert commercial property into hotel use, it is necessary to apply for planning adjustments from the Zhuhai Hengqin Management Committee, and obtain approval through sufficient demonstration of the project's compliance and social value. In terms of tax benefits, by holding properties through Macao companies, rental income can be optimized using Macao's low tax environment, while enjoying special subsidies from the Hengqin Cooperation Zone for the hotel industry, significantly improving investment return.

For mainland enterprises planning to invest in Macao, key aspects of risk control and strategic planning must be considered. Regarding legal compliance, the depth and breadth of due diligence are crucial. Beyond standard financial and legal reviews, special attention should be paid to Macao's Competition Law's market share restrictions and industry-specific regulatory requirements, avoiding compliance risks from overlooking special rules.

For mainland enterprises planning to invest in Macao, key points need to be grasped in risk prevention and strategic layout. In terms of legal compliance, the depth and breadth of due diligence are crucial. In addition to routine financial and legal reviews, special attention should be paid to the market share restrictions and industry-specific regulatory requirements of Macao's Competition Law to avoid compliance risks caused by ignoring special rules.

Meticulous contract drafting is also crucial. Including representations and warranties, transitional obligations, and compensation mechanisms in equity transfer agreements can effectively mitigate transaction risks; Dispute resolution mechanisms should be carefully chosen, prioritizing Macao courts or the Hong Kong International Arbitration Centre (HKIAC) to leverage their mature judicial systems and cross-border enforcement capabilities, avoiding cross-border enforcement obstacles.

For mainland enterprises planning to invest in Macao, key points need to be grasped in risk prevention and strategic layout. In terms of legal compliance, the depth and breadth of due diligence are crucial. In addition to routine financial and legal reviews, special attention should be paid to the market share restrictions and industry-specific regulatory requirements of Macao's Competition Law to avoid compliance risks caused by ignoring special rules.

Strategically, it should align with Macao's "1+4" industrial positioning (focusing on traditional Chinese medicine, finance, technology, and cultural tourism), acquiring technology, licenses, and customer resources through mergers and acquisitions of local enterprises for rapid market entry; A localized talent strategy is crucial, employing at least 50% local Macao employees, complying with the Labor Relations Law while better integrating into the local market; Actively applying for subsidies like Macao's "Small and Medium-sized Enterprise Assistance Program" and "Science and Technology Innovation Support" reduces initial operating costs and improves investment success rates.

In terms of strategic layout, it should be combined with Macao's "1+4" industrial positioning (with a focus on traditional Chinese medicine, finance, technology, and cultural tourism), and acquire technology, licenses, and customer resources through mergers and acquisitions of local enterprises to achieve rapid entry into target markets; The localization strategy of talents needs to be taken seriously, and the proportion of hiring local employees in Macao should not be less than 50%, which not only meets the requirements of the Labor Relations Law but also better integrates into the local market; At the same time, we should actively apply for subsidies such as Macao's "Small and Medium sized Enterprise Assistance Program" and "Science and Technology Innovation Support" to reduce initial operating costs and improve investment success rates.

With the Hengqin Guangdong-Macao Deep Cooperation Zone's continued development, policy synergy between mainland China and Macao in finance, technology, and cross-border factor flows will deepen, providing broader development space for mainland enterprises. Mainland enterprises should closely monitor policy changes, develop flexible investment strategies based on their business needs, balancing commercial value and risk management within the legal framework, fully utilizing Macao's unique advantages for effective internationalization strategy implementation.

With the continuous promotion of the construction of the Hengqin Guangdong Macao Deep Cooperation Zone, policy coordination between the mainland and Macao in areas such as finance, technology, and cross-border factor flow will be further deepened, providing broader development space for mainland enterprises. Mainland enterprises need to closely monitor policy developments, develop flexible investment strategies based on their own business needs, achieve a balance between commercial value and risk prevention within the legal framework, fully utilize Macao's unique advantages, and effectively implement internationalization strategies.

For companies or individuals interested in investing in Macao, our firm has experienced international lawyers who can provide comprehensive legal services. We welcome inquiries.

If a company or individual wishes to invest in Macao, our experienced foreign-related lawyers can provide full legal services. We sincerely invite interested parties to consult us.