Payroll in Macau: Comprehensive Guide to Payroll Management

Macau significantly attracts foreign investment due to several factors. These factors are robust economic growth, a transparent regulatory system, attractive investment incentives, government-funded interest subsidies, and effective enforcement of anti-corruption laws. The country is ranked 116th globally in terms of GDP.

Companies ambitious to grow their business in Macau should be thoroughly familiar with local rules and regulations declared by the Macau government. This knowledge helps them manage payroll in Macau and attract a proficient workforce. Also, a company must understand the salary structure, payroll cycle, payroll options, tax systems, social security contributions, etc.

To set up precise payroll, a thorough understanding of labor requirements compliance and payroll tax in Macau. The below guide discusses all critical aspects of payroll in Macau.

How Is Payroll Calculated in Macau?

Payroll policies and procedures in Macau handle tasks like tracking employees’ working hours and distributing payments. To achieve accurate payroll processing, you must periodically manage record-keeping. Furthermore, you should focus on social security contributions and other valid deductions per the payroll rules and regulations in Macau.

The formula to calculate payroll:

Net Salary = Gross Salary – Gross Deductions

here,

Gross Salary = Basic Salary + All types of Allowances + HRA + Bonus + Arrears + Reimbursements

and

Gross Deductions = Income Tax + Insurance + Public Provident Fund + Leave adjustments + Professional Tax + Loan repayments (if any)

Important Elements of Salary Structure in Macau

The following elements form the salary structure in Macau:

Cost to Company (CTC)

The CTC denotes the total annual amount payable by an employer when hiring an employee. It entails diverse factors like employees’ gross and net remunerations, payroll deductions in Macau, social security contributions, etc.

Gross salary

It covers the factors based on which an employer prepares an employee compensation package. It represents the total amount an employee gets before the employer calculates taxes and deductions. The included factors are bonuses, allowances, overtime pay, payroll deductions in Macau, etc.

Net salary

It denotes the take-home pay sent to an employee’s salary account after considering all deductions (like social security, taxes, donation, etc.) from their gross salary.

Basic salary

It expresses the amount employees receive after the employer calculates all additions (like allowance, bonus, health insurance, overtime compensation, etc.) and payroll deductions in Macau from the annual package. Its value depends on the employer’s job title and business undertakings.

Allowances

The payroll in Macau benefits employees with different allowances (like family, marriage, meal, birth, rental, transportation, housing allowance, etc.,) notwithstanding the company and the industry. It specifies all the professional expenses payable by employers to their employees.

Gratuity

Employers having ten or more employees compensate a lump sum, called gratuity, to employees who are retiring after being employed for five or more years in the company.

How to Set Up a Payroll in Macau

The below Macau payroll process flow chart aids businesses planning to set up payroll in Macau:

• Step 1: Register a business in Macau with the Commercial Registry Office (CRCBM). The first step will also approve your business name’s validity.
• Step 2: Register the company name, national tax number, and labor and tax registration.
• Step 3: Obtain a state or local business ID (if required).
• Step 4: Specify each employee’s details, including their full name, job role, date of birth, employment beginning or termination date, mailing address, work location, and tax filing number. This list should also cover their wage information, compensation details, bank details, work certificates from their earlier employers, and personal income tax forms. These details assist you in precisely calculating all employee pay amounts per payroll policies and procedures in Macau.
• Step 5: Sort your employees among part-time, full-time, and independent contractors. Now state each employee’s exemption status. 
• Step 6: Calculate the applicable income tax from employees’ salaries and file.
• Step 7: Get a Tax Identification Number (TIN) from the  Macau Finances Services Bureau (DSF). You must prepare the following documents for TIN registration.

1. 1. Certificate to commence business
   2. Certificate of Incorporation
   3. Industrial Tax (Form M1)
   4. Payment of the Industrial Tax (Form M7)
   5. Copy of the company’s Articles of Association and Memorandum
   6. Names of shareholders and their ID card copies
   7. List of the company’s administrative board members
   8. Letter of Appointment for the administrative board

• Step 8: Register with the Social Security Fund (FSS). The documents required are:

1. 1. Form for Registration of Employer (Form FSS)
   2. Payment Advice of Contributions of the Obligatory System (Form FSS/DC/Guia-1)
   3. Registration Form (Form M/2)
   4. The company certificate of incorporation
   5. The certificate to commence business
   6. List of employees and their salaries

• Step 9: Open a Macau bank account with any registered local bank to send payroll-related payments. You will need the following documents:

1. 1. A duly filled account opening form, an identification document (like a passport)
   2. Proof of address being issued in the last three months
   3. Articles of association
   4. TIN
   5. Latest business registration certificate
   6. Certificate of company incorporation
   7. Tax declaration from the Department of Financial Services

• Step 10: Calculate each employee’s payroll amount and confirm your company’s payroll method and cycle. You can use any payroll methods like payroll software, traditional bookkeeping, hiring an accountant, or outsourcing to an experienced payroll provider.
• Step 11: Pay each employee through a local entity that lets you recruit and pay employees compliantly. Alternatively, you can use a service from an Employer of Record (EOR) platform in Macau. Pay cards, direct bank transfers, money orders, and mobile money transfer services are available.

A Step-by-step Process of Payroll Processing in Macau

The details of the three stages in processing payroll in Macau are here.

1. Pre-payroll stage

This phase handles fulfilling compliance with Macau’s legal requirements and outlining mandatory business requirements. The following section specifies its statutory components.

Business profile

Register your business as a legal body with the Commercial Registry Office (CRCBM). It will provide you with a unique business number. Remember to specify this number on all authorized payroll communications, like auditing for payroll tax in Macau and reporting and compensation auditing.

Work location

Work location policy should be tailored to the location. Each location must stipulate a set of payroll policies specific to each jurisdiction.

Attendance policy

The attendance policy should adhere to compliance and regulatory requirements set per payroll policies and procedures in Macau. To prepare a transparent, accurate, and flexible attendance policy, you should consider factors like overtime compensation, half-days, and more in the attendance policy. The policy also helps you to calculate standard and special attendance and permissions to simplify payroll calculation.

Leave policy

The leave policy contributes to a boost in employees’ performance and may encourage promotion. It assists in calculating payroll and entitles employees with different leaves (like maternal, sick, childcare, annual paid leave, etc.).

Statutory components

Adhering to Macao Labour Relations Law help you meet legal requirements and enhance your brand reputation. This component stipulates the existing and new statutory compensation laws and regulations benefitting employees with salary and leave entitlements.

Salary components

It entails different factors affecting salary calculation, i.e., deductions, allowances, leave entitlements, supplementary benefits, and payroll tax in Macau. Defining the mandatory salary components helps you meet each employee’s personal and professional requirements.

Payment schedule

It mentions a fixed payment schedule to eliminate payment delays. You can enhance the flexibility of the payment schedule’s components like increments and bonuses to entice and retain a proficient workforce.

Employee details

Make sure to collect personal and professional data about all your employees. If payroll-related problems arise, these details can be used as evidence and ensure timely payments to employees. These details include employees’ names, job roles, nationalities, departments, etc. 

2. Payroll calculation stage

You should upload the collected data into the payroll process in this stage of the payroll compliance checklist in Macau. Supervise employees’ working hours and calculate taxes and deductions. Also, you should calculate employees’ net salaries and print payslips to guarantee an accurate Macau payroll process.

You can calculate and supervise payroll records either manually or automatically. Regular payment processing helps you conform to the payroll policies and procedures in Macau.

3. Post-payroll stage

Elements in this stage of the Macau payroll compliance checklist simplify the confirmation of the payroll process.

Statutory compliance

While processing payroll in Macau, the payroll manager should strictly conform to statutory compliances. They should calculate deductions like social security, donations to charitable organizations, income tax, and more from the employee’s payroll. The employers should then transfer these deductions to the corresponding authorities.

Payroll accounting

It supervises payments and controls a company’s payroll-based expenses. It helps you fulfill compliance and reporting requirements. You can use internal payroll accounting or outsource it to a reliable external auditing service.

Payroll reporting and compliance

Make sure to prepare all statutory reporting and compliance forms to deliver to local regulatory authorities. The processing of payroll in Macau will automatically calculate all deductions, contributions, statutory taxes, compensations, and other details inquired in compliance and reporting forms. Finally, it sends payment to employees. 

Payroll Contributions

Based on salary, the employees and employers should contribute to social security in Macau to conform to the Macau payroll requirements.

Employer contribution

The employer should make 60 MOP of payroll contribution towards social security.

Employee contribution

Employee payroll contributions

The employer should make 30 MOP of payroll contribution towards social security.

Employee income tax

Payroll Cycle

In Macau, the payroll cycle can be monthly, fortnightly, weekly, or daily. 

Macau Payroll Options for Companies

Various options are available under the Macau payroll guide. The employers can select a suitable one based on their budget and requirements. The details of various HR payrolls in Macau are here.

• Internal payroll: This option of the Macau payroll guide is more suitable for firms that sign long-term contracts with Macau. It states that the company should hire an experienced workforce to set up payroll correctly.
• Remote payroll: This HR payroll in Macau option uses remote payroll with your company. The employees get compensation from the remote payroll. It is a reasonable option in the Macau payroll guide, but the company should know various labor laws in the country.
• Macau payroll processing company: Thorough market research is vital if you aim to use this option of the Macau payroll guide. It emphasizes utilizing services from a trustworthy payroll processing company proficient at establishing payroll and payroll rules and regulations in Macau.
• Macau payroll outsourcing: This option of the Macau payroll guide represents an economical and flexible approach to running HR payroll in Macau. It maintains compliance with the Macau payroll requirements and handles each Macau payroll process element. It simplifies the processing of payroll in Macau and keeps your focus on the company’s growth. Companies can use services from an international PEO provider like Multiplier to flawlessly process payroll in Macau and fulfill Macau payroll requirements.

Entitlement and Termination Terms

Entitlement terms in Macau

Employees get the following benefits as per the payroll rules and regulations in Macau.

Paid time off

Employees with at least one year of employment are entitled to at least six days of paid annual leave.

The leave entitlement is three days for employees whose employment duration is three months to one year.

Sick leave

According to Macau Labour Law (Article 53), employees who have finished the probationary period get six days of paid sick leave each year.

Maternity leave

All female employees who have completed at least one year of employment are entitled to 70 days of maternity leave.

The employer pays for the 56 days, whereas the Social insurance (FSS) pays for the remaining 14 days.

From May 26th, 2023, onwards, the employer will pay for the whole 70 days of maternity leave.

Paternity Leave

A father who has finished one year of employment is entitled to mandatory paid paternity leave of 5 days.

The paternity leave must be taken within thirty days of the child’s birth.

Public holidays

Employees in Macau get 20 public holidays per year.

Other leave

Employees receive six days’ leave for their marriage.

Employees get three days’ leave due to the bereavement of a direct relative. 

Termination terms in Macau

• Employers can terminate a fixed-term employment contract based on reasons related to personal, business, or employee misconduct.
• The termination requires a written explanation and notice.
• The employer should stipulate the reasons for dismissal in writing within 30 days of declaring the dismissal.
• Dismissal with cause relates to the following reasons:

1. 1. Recurrent failure to fulfill duties
   2. Willful disobedience
   3. Unfair absences from work
   4. Chronic delay or leaving work early without approval
   5. Breach of safety rules
   6. Acts of physical violence
   7. False statements about the explanation of absences
   8. Continued incitement of disputes with other employees
   9. Severe damage to the interests of the business
   10. Reduced productivity that has been deliberately instigated

• The notice period for permanent or temporary employees in Macau depends on the reason for terminating the employment contract. The following table shows these details.

Severance pay

As per Labour Law (Article 70) in Macau, termination payment is valid if resignation is without cause on the employer’s initiative.  

Irrespective of just cause, the employer may withdraw the contract at any time. In that case, the employee is entitled to the following compensation:

Macau Payroll Processing Company

A comprehensive understanding of employment, local tax, and compensation requirements and reporting is required for foreign investors who are planning to manage precise, timely, and compliant payroll in Macau. Also, they should know about compliance with Macau Labor and local employment laws before establishing payroll in Macau. To explore the maximum benefits of payroll rules and regulations in Macau, you can use services from a worldwide PEO company like Multiplier.

How Multiplier Can Help with Global Payroll

The process of payroll administration in Macau covers factors ranging from payroll processing to entitlement and termination terms. Occasionally, businesses may only be able to administer a part of the payroll rules and regulations in Macau because it is laborious. You can use services from a worldwide PEO platform like Multiplier to solve these issues and handle the Macau payroll process.

Multiplier is reputable for providing EOR solutions to global firms, enabling them to enter 150+ economies. Our proficient team handles payroll calculation, contributions, employee recruitment, entitlement and termination terms, the Macau payroll process, and other associated tasks. Furthermore, our SaaS-based PEO services guarantee that payroll processing operates competently in the country.