Global Forum on Transparency and Exchange of Information for Tax Purposes : Phase 1: Legal and Regulatory Framework.

94 Pages·2011·1.22 MB·English

by  OECD

Global Forum on Transparency and Exchange of Information GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
for Tax Purposes
OF INFORMATION FOR TAX PURPOSES
PEER REVIEWS, PHASE 1: MACAO, CHINA
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange of
information is carried out by over 100 jurisdictions which participate in the work of the Global Peer Review Report
Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation Phase 1
of the standards of transparency and exchange of information for tax purposes. These
standards are primarily refl ected in the 2002 OECD Model Agreement on Exchange of Legal and Regulatory Framework
Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax
Convention on Income and on Capital and its commentary as updated in 2004, which has
been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant MACAO, CHINA
information for the administration or enforcement of the domestic tax laws of a requesting
party. “Fishing expeditions” are not authorised, but all foreseeably relevant information must
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existence of a domestic tax interest or the application of a dual criminality standard. r R
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All members of the Global Forum, as well as jurisdictions identifi ed by the Global Forum as ie
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relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 R
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reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange p
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Some Global Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews. h
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The ultimate goal is to help jurisdictions to effectively implement the international standards se
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of transparency and exchange of information for tax purposes. L
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All review reports are published once approved by the Global Forum and they thus represent a
agreed Global Forum reports. l an
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For more information on the work of the Global Forum on Transparency and Exchange of Re
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Information for Tax Purposes, and for copies of the published review reports, please visit u
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www.oecd.org/tax/transparency and www.eoi-tax.org. to
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Please cite this publication as: M
OECD (2011), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer A
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Reviews: Macao, China 2011: Phase 1: Legal and Regulatory, OECD Publishing. A
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http://dx.doi.org/10.1787/9789264126626-en , C
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This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical IN
databases. Visit www.oecd-ilibrary.org, and do not hesitate to contact us for more information. A
ISBN 978-92-64-12661-9 -:HSTCQE=VW[[V^:
23 2011 56 1 P

Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
Macao, China 2011
PHASE 1
October 2011
(reflecting the legal and regulatory framework
as at June 2011)
This work is published on the responsibility of the Secretary-General of the OECD.
The opinions expressed and arguments employed herein do not necessarily reflect
the official views of the OECD or of the governments of its member countries or
those of the Global Forum on Transparency and Exchange of Information for Tax
Purposes.
This document and any map included herein are without prejudice to the status of
or sovereignty over any territory, to the delimitation of international frontiers and
boundaries and to the name of any territory, city or area.
Please cite this publication as:
OECD (2011), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer
Reviews: Macao, China 2011: Phase 1: Legal and Regulatory Framework, Global Forum on
Transparency and Exchange of Information for Tax Purposes: Peer Reviews, OECD
Publishing.
http://dx.doi.org/10.1787/9789264126626-en
ISBN 978-92-64-12661-9 (print)
ISBN 978-92-64-12662-6 (PDF)
Series: Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews
ISSN 2219-4681 (print)
ISSN 2219-469X (online)
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© OECD 2011
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3
TABLE OF CONTENTS –
Table of Contents
About the Global Forum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Information and methodology used for the peer review of Macao, China . . . . . .11
Overview of Macao . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
A. Availability of information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
A.1.Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
A.2.Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
A.3.Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
B. Access to information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
B.1.Competent Authority’s ability to obtain and provide information. . . . . . . . 56
B.2.Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 62
C. Exchanging information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
C.1.Exchange of information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
C.2.Exchange-of-information mechanisms with all relevant partners. . . . . . . . 72
C.3.Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
C.4.Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . 75
C.5.Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 76
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – MACAO, CHINA © OECD 2011
4
– TABLE OF CONTENTS
Summary of Determinations andFactorsUnderlyingRecommendations. . . . 79
Annex 1: Jurisdiction’s Response to the Review Report . . . . . . . . . . . . . . . . . . 83
Annex 2: List of all Exchange-of-Information Mechanisms inForce. . . . . . . . 85
Annex 3: List of all Laws, Regulations andOtherRelevantMaterial . . . . . . . 86
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – MACAO, CHINA © OECD 2011
5
ABOUT THE GLOBAL FORUM –
About the Global Forum
The Global Forum on Transparency and Exchange of Information for Tax
Purposes is the multilateral framework within which work in the area of tax
transparency and exchange of information is carried out by over 100 jurisdic-
tions, which participate in the Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of
the implementation of the international standards of transparency and exchange
of information for tax purposes.These standards are primarily reflected in the
2002 OECD Model Agreement on Exchange of Information on Tax Matters
and its commentary, and in Article26 of the OECDModel Tax Convention on
Income and on Capital and its commentary as updated in 2004.These stand-
ards have also been incorporated into the UNModel Tax Convention.
The standards provide for international exchange on request of foresee-
ably relevant information for the administration or enforcement of the domes-
tic tax laws of a requesting party. Fishing expeditions are not authorised but
all foreseeably relevant information must be provided, including bank infor-
mation and information held by fiduciaries, regardless of the existence of a
domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identified by
the Global Forum as relevant to its work, are being reviewed.This process is
undertaken in two phases. Phase1 reviews assess the quality of a jurisdiction’s
legal and regulatory framework for the exchange of information, while Phase2
reviews look at the practical implementation of that framework.Some Global
Forum members are undergoing combined – Phase1 plus Phase2 – reviews.
The Global Forum has also put in place a process for supplementary reports
to follow-up on recommendations, as well as for the ongoing monitoring of
jurisdictions following the conclusion of a review.The ultimate goal is to help
jurisdictions to effectively implement the international standards of transpar-
ency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum and
they thus represent agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency
and Exchange of Information for Tax Purposes, and for copies of the published
review reports, please refer to www.oecd.org/tax/transparency.
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – MACAO, CHINA © OECD 2011

7
EXECUTIVE SUMMARY –
Executive Summary
1. This report summarises the legal and regulatory framework for trans-
parency and exchange of information in Macao, China (hereinafter “Macao”).
The international standard, which is set out in the Global Forum’s Terms
of Reference to Monitor and Review Progress Towards Transparency and
Exchange of Information, is concerned with the availability of relevant infor-
mation within a jurisdiction, the competent authority’s ability to gain timely
access to that information, and in turn, whether that information can be effec-
tively exchanged with its exchange of information (EOI) partners.
2. Macao, a Special Administrative Region under the sovereignty of
the People’s Republic of China, has a small and vibrant economy. It hosts
an international free port providing an important link between the mainland
Chinese and global markets. Macao’s gaming industry is one of the most
important in the world.
3. Macao first endorsed the OECD standard for exchange of informa-
tion in 2005. In 2009, Macao’s Legislative Council passed the Exchange
of Information for Tax Purposes Act, which regulates the exercise of the
competent authority’s access powers for international exchange of informa-
tion (EOI) purposes. Since then, Macao has actively sought to expand its
EOI network. In 2011, Macao has concluded 8 TIEAs and 1 DTC Protocol
providing for EOI to the standard.These are in addition to the 5 DTCs con-
cluded in the previous years.Macanese authorities have informed the Global
Forum that they are also in contact with about 10 other jurisdictions, includ-
ing OECD members, GF members and Macao’s main trading partners, to
conclude agreements to the internationally agreed standard on exchange of
information.
4. Companies and partnerships formed under Macao’s Commercial
Code are required to file identity and ownership information with the com-
mercial register.Identity and ownership information is also kept by notaries,
who are involved in the formation of such companies.The same information
is available for offshore institutions as for domestic companies. Some, but
not all, foreign companies with a nexus to Macao are required to have owner-
ship information available to authorities.Trusts cannot be formed under the
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – MACAO, CHINA © OECD 2011
8
– EXECUTIVE SUMMARY
laws of Macao. The offshore and AML/CFT laws ensure that information
is available concerning the settlor, beneficiaries, and trustees of offshore
trusts and foreign trusts having as trustee a service provider based in Macao.
Ownership and identity information is equally available with respect to all
foundations.Enforcement provisions are in place to ensure all relevant enti-
ties provide information to government authorities as required under the
various laws and maintain information prescribed under the Commercial or
the Civil Code.
5. While there are only 72 active public companies which may currently
issue bearer shares, further action should be taken to either ensure that robust
mechanisms are in place to identify the owners of bearer shares or amend the
legislation to eliminate such shares.It is also recommended that Macao clarify
the scope of foreign incorporated companies – including the branches licensed
as offshore institutions –that are subject to registration requirements in Macao
and ensure that all foreign companies with a sufficient nexus to Macao have
full ownership and identity information available to the authorities.
6. Macao’s laws require accounting information and underlying docu-
mentation to be kept for a minimum of five years for relevant entities and
arrangements, with the exception of foundations that are not persons of public
interest and foreign companies which are not performing commercial or
industrial activities in Macao.The exact scope of the underlying documenta-
tion requirements applicable to all entities and arrangements is unclear and
should be further clarified.Bank information on transactions and the identity
of customers is made available through Macao’s AML laws, supported by
some relevant obligations in commercial and financial sector laws.
7. Macao’s tax authorities have the necessary access powers, which
include the power to conduct inspections at the taxpayer’s premises, but not
the power to search and seize.Under the 2009 EOI law, the competent author-
ity is required to gather all information necessary to answer an EOI request.
The EOIAct expressly allows the competent authority to collect information
held by banks and other financial institutions, including offshore institu-
tions.Such information can be exchanged provided that the request is made
under an international tax agreement and there is reciprocity. No domestic
tax interest is required.The requirement to notify the request to the holder of
the information and to any other interested person can be waived when the
counterparty so requires.
8. Macao is actively seeking to extend its network of EOI agreements
and is currently signatory to agreements that provide for exchange of infor-
mation with 13 jurisdictions, 3 of which are in force. The three agreements
that are currently in force all provide for exchange of tax information to the
international standard.All but one of the remaining agreements concluded by
Macao provide for exchange of tax information to the international standard.
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – MACAO, CHINA © OECD 2011