Guide to Establishing a Subsidiary in Macau

Expanding the business is the goal of all entrepreneurs. If you’re considering expanding your business internationally, Macau is a highly suitable and favorable location. Opening a subsidiary business in Macau at low tax rates with a systematic legal framework makes it even more hassle-free. The country is flourishing and welcoming more start-ups to boost its economy. 

As a part of the Special Administrative Region of the People’s Republic of China, Macau has a business-friendly environment. Having a free port in the country, traveling to its neighboring locations and outskirts become much easier and effortless for business owners and entrepreneurs. Besides, businesses with shipping can utilize this port for shipping products to various locations. 

Macau had Mainland China, Hong Kong, Japan, European Union, Switzerland, and the United States as its trading partners. Therefore, investors and entrepreneurs can use these trading partners and tap into a larger target market. All these benefits add up to creating a favorable working environment. However, for incorporation of a foreign subsidiary in Macau, every company has to abide by some rules and regulations. Here is an article on setting up a subsidiary company in Macau. 

What are the Types of Subsidiaries in Macau? 

For the incorporation of a wholly owned subsidiary in Macau, it is necessary to have a detailed idea about the different types of subsidiaries functional in the country. Here are the various types of subsidiaries in Macau:

Macau limited company 

• Must have a minimum capital share of MOP 25,000 
• Should have one company secretary, one director, and one shareholder 
• Company name must end with ‘one man limited’ for a single shareholder 

Macau holdings company

• Must have a minimum share capital of MOP 10,00,000
• Must possess three shareholders and three directors
• Limited liability to subscribed shareholders 
• Should have a limited value of HK$100 shares   

Macau unlimited company 

• No requirement for minimum share capital 
• Should have a capital contribution 
• Must have at least two shareholders 

Macau mixed company 

• No requirement for share capital 
• Must have a capital contribution 
• Must have two shareholders 
• Must have one shareholder with limited liability and another with an unlimited liability 

Macau mixed holdings company 

• Should have a minimum capital of MOP 10,00,000
• Should possess four shareholders 
• Requirement of subscription of shares 
• Three shareholders with limited liability and one shareholder with unlimited liability 

How to Set Up Subsidiaries in Macau? 

Setting up a subsidiary in Macau is a simple process that involves a few systematic steps but less compliance and documentation. Here are the steps for opening a subsidiary business in Macau:

Step 1: Company name registration 

• The first and foremost step for subsidiary company formation in Macau is to register the company name. 
• Since this is a subsidiary, you can stick to the parent organization’s name.  
• For registration, apply to the Commercial Registry Office. 
• Submit a filled-out application form with all the necessary documents. 

Step 2: Memorandum and article of association submission 

• Once you get the company name registered, submit the article of association and memorandum within the next two months. 
• Get each document notarised by a public or private notary. 
• The documents of the company, along with a certified notary, are also accepted. 

Step 3: Company registration 

• After signing the memorandum, provide some essential documents to the Commercial Registry Office within the next fifteen days. 
• These vital documents include the following: 

1. 1. Verified application letter 
   2. Company constitution documents 
   3. Shareholders list along with identification copies. 
   4. Appointment letter for the administrative board 
   5. Photocopy of certified Admissibility of Trade Name.

Benefits of Setting Up a Macau Subsidiary 

The benefits of a subsidiary company in Macau are listed below: 

• Being a part of the Special Administrative Region of China, Macau maintains a cordial business relationship. This helps traders and entrepreneurs to expand their business market. 
• The Macau government promotes an open economic system. This allows foreign investors to conduct international trade.  
• The seamless and free flow of financial resources makes it easy for entrepreneurs to penetrate the Macau markets. 
• Entrepreneurs can be sure of getting zero government intervention in trade management. 
• The taxation system in Macau is segregated into corporate tax, individual tax, and professional tax. The maximum professional tax businesses have to pay is 12%. However, this tax rate varies between 3% to 9% depending on the profits the businesses make. 

Documents to Prepare When Opening a Subsidiary in Macau 

The document checklist for incorporation of foreign subsidiaries in Macau is as follows: 

• Letter of application 
• Certificate of admissibility of company name 
• Notarial deed for shareholders of the company 
• Board members’ acceptance of appointment statement 
• Business declaration form 
• Copy of shareholders’ identity document 
• Copy of business registration certificate 
• Copy of articles of association and memorandum 
• Business tax payment voucher 

What Business Forms Can Macau Subsidiaries Take? 

According to the Macau government, foreign entrepreneurs can set up a business in Macau provided they follow the compliances. The different business structures workable in Macau include limited company, holdings limited company, unlimited company, mixed company, and mixed holdings company. 

However, businesses operating in other countries can set up a subsidiary in Macau. Since this would be an overseas company, entrepreneurs can appoint an agent to regulate and monitor business procedures. For subsidiary company formation in Macau, entrepreneurs must register their companies in the Macau Commercial and Moveable Assets Registry and in the Macau Financial Services Bureau. 

Macau Subsidiary Laws 

The subsidiary business in Macau operates separately and has no connection with the parent state. Besides, the government of Macau gives complete access to startups and entrepreneurs without intervening in their business operations. According to the Macau government, a subsidiary business cannot have a name that matches any existing enterprise. 

The other legal requirements include the following: 

• Approval from the Commercial Registry Office is mandatory for the name of the company when establishing it.
• The subsidiary must consist of at least one director and a company secretary. 
• There is no statutory right on the board members. 

Post Incorporation Compliance 

The compliance for a foreign subsidiary in Macau post registration is as follows: 

Step 1: Tax application 

• Company registration for taxes in the Macau Finances Services Bureau is a must before commencing company operations.

1. 1. To apply for company taxation, these are the documents required: 
   2. Two copies of signed and verified industrial tax forms 
   3. Shareholder’s names with copies of their identification 
   4. Administrative board member list 
   5. Appointment letter for administrative board members 
   6. Certificate of company registration 
   7. Copy of article of association and memorandum 
   8. Industrial tax payment receipt 

Step 2: Other company services enrolment 

• This is the final step, where both the employer and the employees have to enroll in the Social Security Fund. 
• Here, the payments are to be made quarterly. 

Taxes on Subsidiaries in Macau 

To open and run a subsidiary business in Macau, entrepreneurs will have to pay taxes. These taxes are levied on the profits earned in Macau and have no connection to its parent concern. The basic period of paying the tax ranges from January to December. 

Companies earning revenue of up to MOP 6,00,000 get a complete tax exemption. On the other hand, companies earning more than MOP 6,00,000 need to pay a 12% tax. Companies earning MOP 3,000 must pay their complete tax within September of every year. If the profit is more than MOP 3,000, this tax can be paid in installments, once in September and the other time in November. 

Tax Incentives for Companies Setting Up a Subsidiary in Macau 

The incentives for the taxation of foreign subsidiaries in Macau include the following: 

• Corporate income tax: Macau’s corporate income tax rate is currently 12%, which is relatively lower than many other countries. Furthermore, companies that engage in manufacturing or service activities in Macau can apply for a tax exemption of up to three years.
• Stamp duty exemptions: The government of Macau provides stamp duty exemptions for certain types of documents required for setting up a company, such as Articles of Association and capital increase documents.
• Personal income tax exemptions: Foreign executives and professionals employed by a Macau subsidiary can enjoy a personal income tax rate of 7%, significantly lower than the usual rate of 12%.
• Social Security exemption: Macau employers must contribute to the Social Security Fund for their employees. However, a social security exemption for up to three years is possible for companies that meet certain requirements.

Other Important Considerations 

Running a subsidiary business in Macau comes with a set of compliances. Every subsidiary company in Macau should abide by these rules and regulations. The whole process of incorporating a subsidiary in Macau may take some time. Therefore, it is mandatory to be ready with all the documents and submit them at the right time. Not following the rules and regulations may levy heavy fines. 

How Can Multiplier’s Employer of Record Help You Hire & Expand in Macau?

Setting up a subsidiary in Macau requires a thorough understanding of Macau’s rules and regulations. Here, you can collaborate with global EOR services like Multiplier. We help you to employ talent in the country without setting up a subsidiary. This way, you can test new markets and set up teams in new countries at cheaper costs.