A revision of the current protocols on asset and financial information exchange between banks in the MSAR and Portugal and monetary authorities in both regions, will likely be signed after Portugal’s Secretary of State of Tax Affairs arrives in the city on April 5, according to statements by a Portuguese official to newspaper Plataforma.
According to Secretary Fernando Rocha Andrade, with Macau and Portugal having had an agreement to prevent double taxation and tax evasion since 1999, a revision of that agreement would focus on improving information sharing regarding assets and accounts owned by Portuguese nationals in the MSAR.
Mr. Andrade stated that although the agreement wouldn’t implement the Common Reporting Standard (CRS) – an agreement developed within the Organisation for Economic Co-operation and Development (OECD) to automatically exchange information, which Macau agreed to implement by 2018 – it ‘opens a door’ for the application of these measures, and for Macau and Portugal to develop a bilateral information exchange agreement.
According to Mr. Andrade, under the OECD multilateral agreement, on the last day of every year, the Portuguese tax authorities receive a report on financial accounts held by Portuguese nationals in countries also covered by the agreement.
“Portuguese tax legislation does not directly tax the holding of financial assets. Therefore, obtaining information on assets does not in itself determine the application of any tax. However, it is important information to support the determination of the income of those persons who are resident in Portugal, and as such are taxable persons of our income tax. This is the purpose, since the Common Reporting Standards refer mainly to financial assets, that is, bank accounts and other financial accounts held in financial institutions,” said the Portuguese Secretary of State of Tax Affairs, as quoted by the publication.
However the Secretary underlined that the agreement wouldn’t affect Portuguese who reside and develop economic activities in the MSAR, and who already pay taxes demanded by the city’s tax authorities.
Simplifying sea trade
In the same interview, Mr. Andrade also addressed the current negotiations between the MSAR government and Mainland Chinese authorities, for Portuguese products to be exempt from customs tax when entering China, if processed in Macau.
The Tax Affairs official stated that although any measures to improve trade between Portugal, the MSAR and Mainland China were welcome, tax policy involving the country’s products had to be developed in cooperation with the European Union authorities.
According to Mr. Andrade, this same dependency also prevented Portugal from enforcing any changes in value-added tax (VAT) charges, however measures to simplify customs procedures for goods transported via sea from Mainland China and Hong Kong ports were currently being discussed.
The measure would allow traders to reduce the cost of customs procedures, with Mr. Andrade stating the issue would be discussed during his visit to Macau.