Will tax advantage bring the headquarters
of gaming companies to Macau?

We all know that Macau is today the largest gaming market in the world. We see Gaming Companies (license holders or gaming operators) investing billions of US dollars in projects in Macau but surprisingly we do not see the gaming manufacturers investing heavily in the territory, and why is that?

Card, Slots, software, equipment manufacturers and other gaming related vendors do not want to invest in Macau.
Gaming equipment manufactures tend to forget that if they want to provide services such as installing equipment, Macau law requires that they register with the Finance Bureau, a M/1 form. Furthermore, they are only authorized to perform work in Macau up a maximum of 45 days within a period of 6 months. This time frame has already caused some losses to Vendors and Gaming Operators, because the vendor was not able to provide services that the Gaming operator needs within the time frame.

Macau’s location makes it is easy to reach other new markets in Asia, like Singapore, Taiwan, Vietnam, etc., than if the company is doing business in Las Vegas, Atlantic City, London or even Sydney. If the work force is located in Macau, the Vendor will be able to save time, due to the time difference, and money in airfares, mail, faxes, telephones, in some cases rent, etc…

Macau also offers tax advantages. If located in Macau, the employees are theoretically liable to a maximum of 12% income tax. However, applying the sliding scale, the real rate will be around 9%. According to the Macau Chief Executive, these tax rates will be even lower next year. The employee will receive more money but the company will pay less compared with Australia or any European Country, and up to a certain limit even US Citizens can benefit from the Macau low taxes rates. This allows companies to hire the best employees and save some money in salaries.

Social Security payments are extremely low. The company must pay MOP 30 per local worker per month and MOP 45 per month per non local worker. (MOP 45, will be around Euros 4.50 per month).

Complementary Income Taxes (the taxes paid by Companies) is applied at a progressive rates from 3% to 12% for taxable profits above MOP 300,000 (around Euros 30,000). But once again the taxes are paid on sliding scale, so the actual rate will be always below 12%. The Macau Government can reduce by 50% the Complementary Income Taxes if the company promotes economic diversification, contributes to promotion of exports to new unrestricted markets, promotes added. Tax exemptions may be granted upon application detailing grounds with a statement of facts, to projects that comply with at least one of the requirements.

Therefore, because of these and other advantages, I believe that we will see gaming Manufactures, transfer the business centers, production centers and business development centers to Macau. In some cases I strongly believe that some companies will gain a strong competitive advantage by transferring their headquarters to Macau. We will talk about that in another article, but maybe we will see some legal changes, that will bring advantages to local gaming equipment manufactures and vendors. Why pay more for less if your company can pay less for more?