Building luxury businesses in Macau

With Macau’s growing reputation as a luxury destination, local legal expert Bruno Nunes explains how brands can profit in this unique Asian enclave

Macau is a sought-after destination for luxury tourism and retail funlovingvolvo

In Macau SAR, the future looks bright for luxury brands, which are at the height of their popularity and command unmatched desirability. A sought-after global destination for luxury tourism and retail, the total value of retail sales in Macau were 77.18bn patacas (about US$9.56bn) in 2019, the last year before the Covid-19 pandemic. In just the first eight months of 2023, more than 17 million visitors came to Macau. 

Understanding Macau’s luxury opportunity 

Macau or Macao is officially the Macao Special Administrative Region of the People’s Republic of China, a city and special administrative region of China in the western Pearl River Delta by the South China Sea. With a population of about 700,000 and an area of just 32.9 kilometers, it is the most densely populated region in the world. 

Formerly a Portuguese colony, the territory of Portuguese Macau was first leased to Portugal as a trading post by the Ming dynasty in 1557. After 442 years of Portuguese rule, Macau was transferred to China in 1999. Following the transfer, Macau liberalised its casino industry (which previously operated under a government-licensed monopoly) to allow foreign investors, starting a new period of economic development. The regional economy grew at a double-digit annual growth rate from 2002 to 2014, making Macau one of the richest economies in the world on a per capita basis.  

Today, the region is renowned for its luxury resorts, casinos and fancy shopping malls, which create the perfect environment for luxury brands to thrive. For example, Macau offers a number of unique advantages, including the ability to attract high-end mainland Chinese shoppers, continual investment in retail properties and being able to offer some types of goods, such as new-release cosmetics, quicker than the rest of China. 

Building luxury business in Macau 

Entering the market, it is important to understand the business and legal framework. For example: 

  • Legal environment – With an established capitalist service economy, Macau follows a civil law system. Business operations here need to follow the rules laid out in the commercial and civil codes. Chinese national law does not generally apply in the region, and Macau is treated as a separate jurisdiction. Its judicial system is based on Portuguese civil law, continuing the legal tradition established during colonial rule. Interpretative and amending power over the basic law and jurisdiction over acts of state lie with the central authority, however, making regional courts ultimately subordinate to the mainland’s socialist civil law system. 
  • Taxation – Macau offers a low-tax environment, with a maximum corporate tax rate of just 12%. That means luxury businesses receive favourable conditions for running their businesses. 
  • Money laundering prevention – Macau takes money laundering prevention seriously and has strict requirements in place. Businesses must adhere to established protocols to ensure everything stays above board. 
  • Intellectual property protection – Brand assets are well-protected in Macau with robust measures to safeguard intellectual property rights. 

Local entity options in Macau 

Foreign luxury companies typically either incorporate in Macau or establish a branch office as a foreign entity. For brands that operate locally, they often choose the following corporate purpose: “Provision of retail services for [insert item type], including import, export, and trade and services to companies.” 

Usually, these locally incorporated companies have just one shareholder who is an overseas owner, along with two or three directors and a company secretary (though the secretary is not mandatory). Auditors are also not required unless the company falls under Taxpayer’s Group A. 

Once a company is incorporated, certain obligations come into effect: 

  • M/2 form submission: Within 15 days of hiring any employees, employers need to fill out the M/2 form and send it to the Finance Services Bureau – Professional Tax Division (as per law no. 2/78/M). 
  • Social Security Fund enrolment: Employers must enrol themselves and their employees in the Social Security Fund. Quarterly payments are due in January, April, July and October of each year (according to laws no. 4/2010 and 10/2015). 
  • Monthly employee records: Employers need to keep and file employees’ monthly records in their office, as they may be inspected by the Labour Affairs Bureau (based on decree-law no. 50/85/M). 
  • Submission of financial documents: After starting operations, the company must have a fixed asset listing, balance sheet and meeting minutes book (as required by the Commercial Code of Macau). 

If there are any changes to the corporation within 15 days (such as address, share transfer, director resignation/appointment or address change), the company must update the information provided to the business registry. 

Bruno Nunes is the founder of the Macau and Portuguese business law firm BN Lawyers and practises in the areas of corporate law, intellectual property, gaming law and arbitration. He is a registered lawyer in the Macau Lawyers Association, the Portuguese Bar Association and the Department of Justice of the Guangdong Government (China). To learn more about the legal aspects of doing business in Macau or to receive the BN Macau Luxury Guide, contact Bruno at [email protected].  

Email your news and story ideas to: [email protected]