Guidance

Overseas business risk: Macao

Updated 31 July 2023

1. Context

Macao is a Special Administrative Region (SAR) of China. It covers an area of around 33 square kilometres on the southern coast of China and has a population of around 660,000 people.

The Sino-Portuguese Joint Declaration outlines the “One Country, Two Systems” model for the Macao SAR following the handover from Portugal to China in 1999. China is responsible for Macao’s foreign affairs and defence whilst the Basic Law of the SAR provides for a high degree of autonomy in the other areas of its governance, including economic and trade affairs.

2. Economics and trade

Although a significantly smaller trade and investment partner for the UK than neighbouring Hong Kong, Macao shares some of the same characteristics that have made Hong Kong attractive to UK business, such as:

• absence of capital controls
• currency indirectly pegged to the US dollar (via a peg to the HKD)
• ease of setting up a business
• free port
• low-tax regime
• strong connectivity to mainland Chinese market via CEPA and Greater Bay Area projects

Macao’s service economy is dominated by gambling, with gaming taxes accounting for more than 75% of government revenue in the first four months of 2023.

Macao’s economy has rebounded following the relaxation of border control measures and the resumption of travel between Hong Kong, the mainland, and Macao. The economy grew 38.8% in Q1 2023 compared to Q1 2022, led by exports of gaming and other tourism services. The local unemployment rate declined from 3.9% in January-March 2023 to 3.6% in March-May 2023. Further data on key economic indicators can be found on the Macao Government Statistics and Census Service webpage.

British businesses operating in Macao, or thinking of establishing there, should familiarise themselves with the changing political, social and business landscapes, seeking professional advice where needed.

2.1 Trade and investment overview

Macao’s capitalist economic system and legal regime are enshrined under the Basic Law until at least 2049. Macao is a customs territory that holds WTO membership separate to China. It is characterised by a liberal economy and an investor friendly environment. There are no special rules governing FDI, with domestic and foreign businesses subject to the same treatment and no capital controls. The territory imposes low corporate and personal tax, with a top rate of 12%. The gaming industry is an exception, with 40% tax levied on gross gaming revenue plus a 4% contribution to sustainable development, including a social security fund.

The Macao Trade and Investment Promotion Institute provides services to foreign and local individuals seeking to set up a company in Macao.

Macao has a Free Trade Agreement with mainland China, the Comprehensive Economic Partnership Agreement. In January 2021 Macao signed a Tax Information Exchange Agreement with the UK and 15 other jurisdictions. Macao introduced a Double Taxation agreement with Hong Kong in January 2021.

The establishment of the Guangdong-Macao Intensive Cooperation Zone (ICZ) in Zhuhai in 2021 aims to promote diversification of Macao’s economy.  It also highlights Macao’s increasing economic integration with the Greater Bay Area.

The Macao Government offers incentives to businesses that meet certain criteria, with no Macanese resident share ownership requirement. These include corporate tax exemptions, reduced capital requirements for loans and stamp duty exemptions.

The UK has a notable business presence in Macao with a British Chamber of Commerce in existence since 2006. British business interests include banking, construction, hospitality, creative industries and education. Further opportunities for British businesses could develop as the Greater Bay Area initiative gains pace.

2.2 Gaming sector reform

In June 2022 Macao’s Legislative Council passed the Gaming Reform Bill. The legislation gives government a tighter grip on gaming firms and introduces regulation of gambling ‘junkets’ and VIP gambling rooms.

The biggest changes include a rise in gaming taxes to 40% and the renewal of gaming licenses with the six existing operators for up to 10 years, instead of the previous 20 years. These license holders are now required to invest in the development of Macao’s overseas tourism markets and non-gaming sectors (including healthcare, education and infrastructure), supporting Macao’s moves to diversify its economy.

2.3 Impact of COVID-19

The Macao Government has removed many of the travel restrictions in place throughout the COVID-19 pandemic. Up to date advice can be found on the UK government travel advice website.

3. Government

3.1 Political Structure

The current Chief Executive of the Macao Special Administrative Region Government (MSARG) is Mr Ho Lat Seng, who was elected for a five-year term by a 400-member Election Committee in 2019.  The Legislative Assembly is Macao’s parliament, a 33-member body comprising fourteen directly elected members; twelve indirectly elected members representing “functional constituencies” selected mainly by the business sector and the professions; and seven members appointed by the Chief Executive.

In advance of the Legislative Assembly elections held in September 2021, 21 opposition candidates were disqualified from standing on the basis that they did not meet vetting criteria. As a result, only pro-Beijing legislators were subsequently elected.  Voter turnout for the Legislative Assembly elections in 2021 was 42%, the lowest since the handover.

4. Business and Human Rights

The Basic Law of Macao provides for freedom of expression, including for the press. Local media expresses a range of views, but the government takes steps to restrict unfavourable news coverage. There is some evidence of self-censorship by academics and local media.  Legislation is in force to criminalise actions that disrespect the Chinese national anthem.

The Basic Law enshrines the people’s right to form and join independent unions, conduct legal strikes and organise collective bargaining. Consultation to implement a trade union law in Macao, which began in October 2021, appears to have stalled. Previous attempts to introduce similar legislation have been rejected since the handover.

The Macao Basic Law provides for an independent judiciary. Macao operates a Continental European Legal System. Civilian authorities maintain effective control over the Macao Police Force and there are mechanisms to investigate and punish any cases of abuse and/or corruption.

Macao’s legislature passed the Law on Safeguarding National Security (NSL) in 2009 which was further amended in May 2023. This law includes offences of treason, secession and subversion against the Central Government, as well as “preparatory acts” leading to any of the three acts. Under the NSL, an individual may face criminal proceedings if they engage in activities that are deemed to endanger national security in Macao. This could apply to activities conducted both inside and outside of the Macao SAR, which in practice could include activities conducted in the UK. However, no cases have been brought to date. Since March 2018, Macao has banned foreign judges from presiding in cases involving national security issues. An official English translation of Macao’s Basic Law does not exist.

The Legal Regime for the Interception and Protection of Communications (enabling the judicial police in Macao to collect evidence via telecommunications and social media) came into effect on 1 August 2022.

Macao has yet to establish an independent human rights body, as recommended by the UN Human Rights Committee.  Please see the United Nations Office of the High Commissioner for Human Rights (OHCHR) pages on China for more information on human rights issues in Macao.

5. Intellectual Property

Intellectual Property (IP) rights are territorial, that is they only give protection in jurisdictions where they are granted or registered. If you are thinking about trading internationally, then you should consider registering your IP rights in your export markets. Specific advice should be sought from qualified professionals either in the UK or overseas.

Macao has a separate IP system to mainland China. Macao is not in itself a member of the World Intellectual Property Organisation (WIPO). However, China has extended for application a number of WIPO treaties, including the WIPO Copyright Treaty.

The Intellectual Property Department of the Macao Economic and Technological Development Bureau is the government department responsible for registration of trademarks, patents and designs, and for overseeing copyright policy. Customs is the government department responsible for enforcing criminal law regarding intellectual property.

General information on IP is provided on our intellectual property page. More detailed guidance on protecting IP overseas in other territories is available from the UK Intellectual Property Office.

6. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

For more information, read the information provided on our bribery and corruption page.

6.1 The UK Bribery Act

The Bribery Act applies to non-UK companies operating in the United Kingdom and to UK companies working overseas. It created four prime offences:

• Two general offences covering the offering, promising or giving of an advantage, and requesting, agreeing to receive or accepting of an advantage;
• An offence of bribing a foreign public official; and
• A new offence of failure by a commercial organisation to prevent a bribe being paid to obtain or retain business or a business advantage (should an offence be committed, it will be a defence that the organisation has adequate procedures in place to prevent bribery)

The Act recognises that no bribery prevention regime will be capable of preventing bribery at all times. A company will have a full defence if it can show that despite a particular case of bribery it nevertheless had adequate procedures in place to prevent persons associated with it from bribing. Companies must therefore make sure that they have strong, up-to-date and effective anti-bribery policies and systems in place to prevent bribery by persons associated with them.

6.2 Bribery and corruption in Macao

The Commission Against Corruption (CCAC) is the primary anti-corruption organisation in Macao. Macao has laws to combat official and private corruption activity that are non-discriminatory and effectively enforced.

7. Terrorism threat and protective security

Although there is no recent history of terrorism in Macao, attacks cannot be ruled out. Please ensure you check foreign travel advice for latest information on risks and precautions.

You should be aware of the global risk of indiscriminate terrorist attacks, which could be in public areas, including those frequented by expatriates and foreign travellers. UK Counter Terrorism Policing has information and advice on staying safe abroad and what to do in the event of a terrorist attack. Find out more about the global threat from terrorism.

8. Organised crime

Casinos and Gambling Junkets have long been known to be utilised in the laundering of funds for those involved in criminality, corruption and terrorism. Although the current operations of junket businesses are determined by the external business environment in mainland China, organised crime groups treat VIP rooms as economic territories. Following the introduction of new gaming regulations in January 2023, the authorities have been clamping down on junket operations and gaining greater control and oversight of the gambling industry as a whole. PRC Currency Restrictions see Macao operate in the “grey market” to facilitate alternative remittance activities through a well-established debit card system involving cancelled credit purchases and also through pawn shops. All such activities are available and easily exploitable by money launderers.

Although money laundering compliance has improved in Macao over the last decade, particularly following mainland China’s anti-corruption drive, and the publication of Financial Action Task Force’s report assessing Macao’s anti-money laundering and counter-terrorist financing, the risk of money laundering within the gaming industry remains of significant concern.