Tax code

The proposed changes to the tax code are not a “revolution” but necessary upgrades – Legal expert

The proposed changes to the local tax code will not be a complete overhaul but updates needed to standardize and upgrade outdated tax regulations in the SAR, lawyer and notary Rui Filipe Oliveira said at a seminar on the question organized by the British Chamber of Commerce in Macau.

Bills for an overhaul of the local tax code and a new legal framework for the exchange of information in tax matters have been approved in the Legislative Assembly (LA), and will now proceed to assessment and review. discussion in committee.

Economy and Finance Secretary Lei Wai Nong previously said the changes would unify the rules of separate tax laws applied separately since the 1970s, clearly defining rights and obligations in tax legal relationships, and update the local tax code in accordance with international standards. .

The bill introduces concepts such as tax resident and tax residence “in order to” better comply with its international tax obligations “and to better” attract more foreign investors “to the SAR and aims to” unify the separate rules of current tax legislation, as well as clearly defining the rights and obligations in tax legal relations, in the tax court process and in the tax execution process.

The lawyer noted that the reform was driven by legal disputes over issues such as stamp duties and tourist taxes, as well as the need to improve local regulations and comply with United Nations standards. economic cooperation and development (OECD).

“Is there a tax revolution coming? The answer is no. What is coming is quite simply a new body of law which will make the link in a coherent way and which will make the link because the system was developed at the end of the 1970s and the various tax laws applied since then do not. are sometimes not consistent or consistent, ”MdME’s lawyer said at a press conference. the speech.

“The new tax code will unify and organize the current system. There will also be changes in tax procedures, which is important because [law practicioners] sometimes have difficulty dealing with tax authorities in many ways. It is important to have a clear set of rules and procedures so that individuals and taxpayers can assert their rights ”.

The tax planning expert also noted that the bill also proposed an increase in the authority and powers given to tax authorities, which he saw as “part of any complete tax system” while filling some gaps. regulations concerning legal tax procedures and tax enforcement procedures.

“There was none, so we pleaded in court with the use of the general code of administrative procedure. It is also very important that there are procedures for applying tax regulations. We handled his case on the basis of a 1951 law, which is sometimes applied and sometimes not […] This is something very important because the tax administration has the capacity, on the basis of unpaid tax, to seize your assets, ”said Oliveira.

Nonetheless, the lawyer also pointed out that while most of the proposed changes in the structure of the tax code are not “as significant” as they stand, some changes, such as those relating to corporate liability, could be. to be.

He expressed, for example, that there will be a secondary liability of members of corporate bodies, directors, asset managers and tax representatives, which means that in the future they could be liable for the tax debts of their companies. .

The lawyer also addressed the recently ratified global corporate minimum tax, which saw G20 leaders formally approve a global minimum corporate tax, which would ensure that global corporations pay a minimum tax rate of 15%. and curb tax evasion.

Some 136 countries – including mainland China – have ratified the agreement, which is expected to go into effect globally in 2023 and generate an additional $ 150 billion in annual tax revenue, according to the Organization for Economic Co-operation and Development.

Financial Services Bureau (DSF) Director Stephen Iong Kong Leong recently revealed that the local government is currently considering the impact of adjusting the current corporate tax to match the recently ratified global minimum corporate tax agreement for investment in the city.

“The target for this is multinational companies that have a significant level of income. For example, the offshoring of tax revenues will target multinational companies with global turnover exceeding 20 billion euros, or nearly half of Macau’s GDP. It is about targeting the very big players and the winners of globalization who manage to play and choose lower tax jurisdictions, ”he noted.

“Corporate tax would also be implemented for multinationals with turnover of around 750 million euros.”

The lawyer said most “mainstream businesses” in Macau would likely not be affected by the changes given their scale, with the exact details of how the deal will be implemented yet to be worked out.