A Macao Offshore Auxiliary Company (OAC) offers a holding company passive investments structure with no taxes to pay. The tax exemption is based on holding company shares from non-resident companies around the world. An OAC cannot engage in active trading or commercial activities. All of the OAC’s shares may be held completely by foreigners.
Another type of offshore company is called the “Macao Offshore Commercial Company” (OCC) which can do all types of offshore business activities.
OAC’s are regulated by Macao’s Offshore Regime Law of 1999 (SAR). SAR also regulates an OCC company. Tax exemption depends upon meeting all of the following requirements:
1. All business transactions are done with foreign currencies (not Macao currency).
2. Macao residents do not conduct any business with the OAC.
3. Companies held are not located in or registered by Macao.
The Macao Trade and Investment Promotion Institute (hereinafter “IPIM”) regulates and supervises all OAC’s.
Background
Macao used to be called Macau when the Portuguese colonized it. Once mainland China took control from Portugal in 1999, the name was changed to Macao. While being administered by the People’s Republic of China, Macao enjoys a large degree of autonomy. This is demonstrated by the gambling it enacted.
Macao passed a law legalizing gambling in 2001. As a result, many gambling casinos opened in Macao in 2002. An internet gambling law was enacted in 2003. These types of laws are unheard of in mainland China. Now Macao is Asia’s leading gambling center.
Benefits
A Macao Offshore Auxiliary Company (OAC) enjoys these benefits:
• Foreign Owners: Foreigners can own all of the shares in an OAC.
• No Taxes: OAC’s do not pay any taxes. Note: U.S. residents pay taxes on their entire global income like residents of some other countries. They must all disclose all income to their tax authorities.
• Private: The public records do not include the names of the beneficial owners and shareholders.
• One Director and Shareholder: The minimum requirement is one shareholder and one director who can be the same person to manage the OAC.
• Low Minimum Capital: The minimum authorized capital is very low.
• English: English is not an official language. However, all documents can be prepared in English.
Offshore Auxiliary Company (OAC) Name
OAC’s company names must not resemble other Macao company names. A company name may be written in English.
The phrase “Macao Offshore Commercial” must be included in the OAC’s name. Alternatively, the initials “OAC” may be used.
Registration
The IPIM handles the registration of all OAC’s. The application documents includes an investment plan regarding the international companies whom the OAC holds their shares. Once the IPIM approves the application, it issues an Offshore Auxiliary Permit.
It can take up to one month from the application date to receive the Offshore Auxiliary Permit.
Shareholders
The minimum requirement is one shareholder to form an OAC. Citizens from any country can be shareholders and they do not have to reside in Macao. However, foreign shareholders who become Macao residents must file a change of residency notice to the IPIM.
Directors
A minimum of one director is required to manage the OAC. The only required shareholder may be the only director to manage the OAC by him or herself.
Citizens from any country can become directors. Individuals or corporate bodies may become directors. The corporate bodies can be registered in any country. Resident directors are not required.
Company Officer
The appointment of a company officer is an option. Some directors may wish to delegate their authority to one or more company officers like a president or a treasurer or a secretary.
Registered Agent and Registered Address
A local registered agent must be appointed by the OAC. The agent’s office address may be used as the OAC’s registered address.
Minimum Capital
The sum of 25,000 MOP “Macanese Pataca” is the required minimum authorized capital. In July of 2017 that amount was a little less than $2,500 USD.
Taxation Exempt
An OAC pays no taxes of any kind. No corporate tax, income tax, wealth tax, capital gains tax, stamp duty, gift tax, or inheritance tax. Even the business registration tax paid by all new companies is exempt. However, these exemptions depend on the following three requirements:
1. No business is conducted with Macao local residents.
2. No business is conducted with local resident companies.
3. MOP currency is never used when conducting business.
Most Macao companies receive a tax exemption on the first 200,000 MOP. In July of 2017, this amounted to a little less than $25,000 USD. The following 100,000 MOP pays a 9% tax rate. After that amount, the tax remains at 12%. Worldwide income is taxed by Macao while most countries do not tax income earned outside their borders.
If the OAC hires local residents as employees in Macau the employees must pay an income tax on their wages. Remote workers not residing in Macau are exempt from paying income taxes on their salaries or compensation.
Another income tax exemption exists for OAC’s regarding their non-resident managers and specialists. For the first three years these employees do not pay any professional tax (wage taxes). Foreign managers and specialists must become Macao legal residents in order to qualify for this exemption.
Note: U.S. taxpayers and everyone else paying taxes on global income must declare all income to their governments.
Accounting
Yearly financial statements are required to be filed with the IPIM verifying the sources of all income were not from Macao to qualify for the tax exemptions.
Public Records
The beneficial owners’ names are filed with the IPIM upon registering the OAC. However, their names are not included in the public records.
Time for Registration
Registering an OAC can take one month form approval.
Shelf Companies
Macao shelf companies are not for sale.
Conclusion
A Macao Offshore Auxiliary Company (OAC) has these benefits: total foreign ownership, privacy, complete tax exemption, minimum of one shareholder and one director required who can be the same person, English documents permitted, and a low minimum capital.
