Macau

Macau: Recent key legal developments

Pedro Cortés, Frederico Rato

Rato Ling Lei & Cortés

What were the most important legal developments in the last 12 months and how might they affect businesses?

There were some notable legislative changes in Macau SAR during the last 12 months.

First of all, with the financial transparency of Macau in mind, the legislative assembly approved the 5/2017 Law that expands the 20/2009 Law on the exchange of information on tax matters. In addition to the requirement to provide information on request, the bill now includes two new components – one being the spontaneous exchange of information and, the other, the automatic exchange of information. The 5/2017 Law came about due to the need to adapt the previous law on the exchange of information on tax matters so that it could comply with the Common Reporting Standard (CRS) containing procedures for due diligence on financial account information from the United Nations (UN) and the Organisation for Economic Cooperation and Development (OECD).

Other changes include the 6/2017 Law, regarding the control of the transporting of cross-border cash and bearer negotiable instruments, which will enter into force on November 1 2017. This law aims to prevent money laundering and terrorism as well as protecting the stability and security of the economic system of the territory. The new law foresees that those who carry cash or bearer negotiable instruments (such as, cheques, bills, and money orders) whose value amounts to or exceeds 120,000 MOP ($15,000) must declare it to the customs services. This applies when exiting Macau as well. Non-compliance with these obligations is punishable with a fine of between 1000 MOP and 500,000 MOP.

In February, the 5/2016 Medical Error Act came into effect with the aim of protecting the rights of patients and healthcare providers. Before this law was established, Macau's legal system had no specific legislation regarding medical error and relied on piecemeal legislation and general rules. Approaches to the subject were inconsistent – for example, civil liability pertaining to medical error was governed by different sets of rules (contractual and extra-contractual liability rules) and courts (the Judicial Base Court and Administrative Court), depending on whether the healthcare provider belonged to the private or public sector. The new legal regime establishes: (1) that healthcare providers have the duty to inform and patients can exercise their right to refuse to be informed; (2) that as healthcare providers become aware of or suspect an occurrence of medical error, they are charged with the duty to notify the Macau health services within 24 hours; (3) the creation of the Investigation Committee of Medical Error, whose principal functions are to research and investigate the verification of medical error; (4) that the Judicial Base Court is the competent entity for all legal proceedings pertaining to civil liability regarding medical error; and, (5) the creation of the Centre of Mediation of Medical Disputes, which provides mediation as a voluntary alternative dispute resolution procedure for medical error.

Another important change came in the form of Law 6/2016. This law establishes the regime for the enforcement of decisions to freeze assets contained in the resolutions of the United Nations Security Council adopted in the framework of the fight against terrorism and the proliferation of weapons of mass destruction applicable to the Macao Special Administrative Region (MSAR), by decision of the People's Republic of China. The chief executive of the MSAR is competent to execute asset-freezing decisions in the MSAR, with technical assistance from the Coordinating Commission for the Regime of Freezing of Assets. With the recent surge of money laundering connected to terrorism, countries and regions have realised that these problems require a global approach for any solution to be effective. This law is an effort to keep up with international regulatory measures, as the MSAR undergoes its transformation into a world-class city.

Lastly, the legislative assembly is discussing changes to the leasing regime under the Civil Code. After the liberalisation of the gaming industry, rapid development in the local real estate market and soaring prices fueled an increasing demand in the lease market. The approval of Decree Law 29/96/M and Decree Law 55/98/M – which aim to regulate internal voluntary arbitration and commercial arbitration – reflect the need for a legal regime of arbitration in order to reduce pressure on the courts and provide better resolution of disputes. The proposed amendment of the leasing regime also aims to enable the chief executive of Macau to set a cap on rent-increase rates based on a coefficient scheme. It also aims to reinforce the interests of low-income groups and ensure their rights. The aim of the amendments – which are yet to be approved – is a more stable rental market with a speedy dispute resolution process.

What are the main restrictions on foreign investment?

There are no restrictions on foreign investment in Macau. Macau has a transparent, non-discriminatory and free-market economy, aiming to achieve diversification by attracting foreign investment in new sectors aside from gaming.

Nonetheless, Macau is also a fully regulated jurisdiction that is seeking a high level of transparency and compliance at all levels. Thus, and as long as Macau foreign investors abide by the local laws, there are no barriers to inward foreign direct investment.

The government's economic policy goal is to maintain an investor-friendly environment where investors are encouraged to set up new companies, branches or representative offices, with minimal intervention from the public authorities.

What key structuring and other considerations should be highlighted to potential investors/businesses looking to enter this market?

Despite long being considered the world's biggest gambling destination, Macau might be reaching an important turning point, given the growing awareness of the importance of economy diversification. In order to accomplish Macau's goals, it is of paramount importance to set new rules and procedures to ensure continuous but non-intrusive market control, thus avoiding negative influences.

As previously mentioned, huge steps have been taken regarding the tackling of corruption and money laundering – two serious obstacles to be overcome to achieve a healthy business and investment climate. Aside from all the new legislative developments aimed at increasing Macau's foreign direct investment, low tax rates teamed with a simple tax regime, and a wide range of tax incentives with no discrimination between local and foreign investments, have also been important factors in attracting potential investors looking to enter the local market.

Bilateral investment treaties and double taxation avoidance treaties have been signed with several countries and, as previously mentioned, Macau has also ratified the WTO Trade Facilitation Agreement, so that trading between the Special Administrative Region and foreign countries gradually will be eased.

Moreover, the Mainland and Macau Closer Economy Partnership Arrangement (CEPA), which is a free-trade agreement signed in 2003 between China and Macau, along with the implementation of the Pan-Pearl River Delta Regional Cooperation Framework Agreement and the development of the adjacent area of Hengqin, have been the catalyst for promoting trade and business between Macau and other regions.

In fact, the new developing Hengqin Island, which covers an area three times the size of Macau, is expected to become a fundamental business platform between Macau SAR, the People's Republic of China and the Portuguese-speaking countries.

Most importantly, major infrastructure projects are expected to be completed within a few years' time, such as the new Hong Kong-Zhuhai-Bridge, the new ferry terminal in Taipa and the Macau Light Rapid Transit System. In addition, and according to Macau's five-year development plan (2016 to 2020), the city aims to become not only a world centre for tourism and leisure, but also, as stated above, a trading and business platform between China and the Portuguese-speaking countries.

Achieving these goals would almost certainly enhance foreign investment into Macau.

Is there a competition law in place and how strictly does it control M&A or other activity?

The general rules regarding competition are contained in the Macau Commercial Code, which states that competition between entrepreneurs must take place in a manner that does not harm the interests of the economy of Macau, and within the limits established by the law.

In addition, all agreements or practices that have the object or effect of preventing, falsifying or restricting competition are forbidden, without prejudice to any special provisions. An agreement restricting competition between entrepreneurs must respect the specified legal limits, otherwise it will be considered null and void. Such an agreement must respect the interests of the economy of Macau and be within the limits of law, and be made in writing.

In this context, an entity that operates an enterprise under a legal monopoly is obliged to contract with whoever requires the services that constitute the object of the enterprise, and must observe the principle of equal treatment.

There is no competition authority in Macau. Competition provisions are enforced by the courts.

How effective are methods of dispute resolution and enforcement?

Macau has three levels of jurisdiction, including the Macau Judicial Base Court (which is the first instance court) the second instance court and the last instance court. The methods of dispute resolution and enforcement are highly effective, despite the fact that they may take a considerable amount of time.

As to alternative or complementary dispute resolution, such as arbitration, Macau is a dual UNCITRAL system, with its international arbitration law based on the UNCITRAL model law.

Legislation Guide – Macau

Rato Ling Lei & Cortés

Recent key legal developments

Pedro Cortés, senior partner and Manuel Moita Junior, jurist

What were the most important legal developments in the last 12 months and how might they affect businesses?

Among other legislative changes enacted during the last 12 months, several of the new laws and amendments aimed at continuing the opening-up of the Macau SAR market to investors are worthy of particular note.

In order to facilitate and reduce the bureaucracy involved in customs clearance procedures, thus leading to the promotion of MICE (meetings, incentives, conventions and exhibitions) and the logistics industry in Macau SAR, on July 4 206 the Legislative Assembly approved Law 3/2016, amending the existing Foreign Trade Law issued in 2003. This amendment introduced an ATA Carnet (Admission Temporaire/Temporary Admission), which is an international customs document that provides an efficient method for the temporary import of goods, and which greatly eases the way for foreign exhibitions and businesses.

Another change in legislation was published on July 18 2016 – the Administrative Regulation 19/2016, which develops the broad principles contained in the Foreign Trade Law.

Macau SAR has also ratified the WTO Trade Facilitation Agreement (TFA), which contains provisions regarding expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. The TFA will only enter into force when two-thirds of the WTO members have formally accepted the agreement. Macau and Hong Kong have also announced their intention to sign a free-trade bilateral agreement up to the end of 2016.

The Administrative Regulation 9/2016 (published on April 5 2016) established a fee exemption for the issuing or renewal of industry licences, which will further ease the implementation and opening of new companies and businesses.

Last but not least, it is also important to point out the most recent development regarding the authorities’ continuous efforts to combat money laundering and corruption in Macau SAR. Since last May, Macau’s Gaming Inspection and Coordination Bureau (best known by its Portuguese acronym DICJ), set a higher standard for anti-money laundering compliance by introducing new AML measures. The aim of these measures was to implement a risk-based approach and enhance customer due diligence procedures, mainly related to the identification of patrons and the reporting of suspicious transactions.

It is widely known that money laundering is a very serious concern within the Macau gaming industry and, in fact, it is more prevalent in this region than anywhere else in the world. With the entry into force of new instructions to be implemented by casino concessionaires and sub-concessionaires, the government is sending a clear signal that Macau has renewed its commitment to the prevention of money laundering and the financing of terrorism in line with the Asia Pacific Group’s guidelines.

What are the main restrictions on foreign investment?

There are no restrictions on foreign investment in Macau, which is a transparent, non-discriminatory and free-market economy, aiming to achieve diversification by attracting foreign investment in new sectors aside from gaming.

Nonetheless, Macau is also a fully regulated jurisdiction that is seeking a high level of transparency and compliance at all levels. Thus, and as long as foreign investors abide by the local laws, there will be no barriers to inward foreign direct investment. The government’s economic policy goal is to maintain an investor-friendly environment where investors are encouraged to set up new companies, branches or representative offices, with minimal intervention from the public authorities.

What key structuring and other considerations should be highlighted to potential investors/businesses looking to enter this market?

Despite long being considered the world’s biggest gambling destination, Macau might be reaching an important turning point, given the growing awareness of the importance of economy diversification. In order to accomplish Macau’s goals, it is of paramount importance to set new rules and procedures to ensure continuous but non-intrusive market control, thus avoiding negative influences.

As previously mentioned, huge steps have been taken regarding the tackling of corruption and money laundering – two serious obstacles to be overcome to achieve a healthy business and investment climate.

Aside from all the new legislative developments aimed at increasing Macau’s foreign direct investment, low tax rates teamed with a simple tax regime, and a wide range of tax incentives with no discrimination between local and foreign investments, have also been important factors in attracting potential investors looking to enter the local market.

Bilateral investment treaties and double taxation avoidance treaties have been signed with several countries and, as previously mentioned, Macau has also ratified the WTO Trade Facilitation Agreement, so that trading between the Special Administrative Region and foreign countries gradually will be eased. Moreover, the Mainland and Macau Closer Economy Partnership Arrangement (CEPA), which is a free-trade agreement signed in 2003 between China and Macau, along with the implementation of the Pan-Pearl River Delta Regional Cooperation Framework Agreement and the development of the adjacent area of Hengqin, have been the catalyst for promoting trade and business between Macau and other regions.

In fact, the new developing Hengqin Island, which covers an area three times the size of Macau, is expected to become a fundamental business platform between Macau SAR, the People’s Republic of China and the Portuguese speaking countries.

Most importantly, major infrastructure projects are expected to be completed within a few years’ time, such as the new Hong Kong-Zhuhai-Bridge, the new ferry terminal in Taipa and the Macau Light Rapid Transit System. In addition, and according to Macau’s five-year development plan (2016-2020), the city aims to become not only a world centre for tourism and leisure, but also, as stated above, a trading and business platform between China and the Portuguese-speaking countries. Achieving these goals would almost certainly enhance foreign investment into Macau.

What are the most important laws relating to labour & employment?

There have been some recent changes in the labour regime, however, the most relevant pieces of legislation in force in Macau SAR are as follows:

• Decree Law 40/95/M: Employees’ Compensation Insurance Ordinance;

• Law 4/98/M: Framework Law on Employment Policy and Workers’ Rights;

• Law 7/2008: Labour Relations Act;

• Law 21/2009: Law on Employment of Non-Resident Workers;

• Law 6/2004: Law on Illegal Immigration and Expulsion;

• Administrative Regulation 17/2004: Regulation on the Prohibition of Illegal Work;

• Administrative Regulation 8/2010: Regulation of the Law on the Employment of Non-resident Workers;

• Administrative Regulation 13/2010: Regulation on the Conditions or Responsibilities to be Established in Employment Permits for Non-resident Workers;

• Law 6/2015: Regulation on the Right to Compensation to for Occupational Accidents and Diseases; and,

• Law 7/2015: on the Minimum Wage for Cleaning and Security Employees in Property Management Services.

What anti-bribery/anti-corruption laws are in place and how strictly are they enforced?

Since the establishment of Macau as a special administrative region of China, several acts against bribery and corruption have come into effect:

• Decree Law 58/95/M: Sections 336 to 339 of the Macau Penal Code (regarding the bribery of persons who work in the public sector);

• Law 10/2014: Prevention and Suppression of Bribery in External Trade;

• Law 04/2012: Amendment to Law 10/2000, Commission Against Corruption of the Macao Special Administrative Region;

• Law 19/2009: Prevention and Suppression of Bribery in the Private Sector;

• Law 10/2000 republished under Law 4/2012: Organic Law of the Commission Against Corruption of the Macao Special Administrative Region;

• Law 3/2013: Amendment to Law 3/2009, Organisation and Operation of the Service of the Commission against Corruption; and,

• Law 3/2009: Organisation and Operation of the Service of the Commission against Corruption

In line with the long-term process of eliminating corruption, Macau’s government established the Commission Against Corruption (CCAC) in 2000, which has become the main enforcement agency for the prevention, investigation and repression of acts of corruption involving both public and private sectors, according to the Penal Code and the Penal Procedure Code. In fact, the CCAC was granted broad investigative powers, which permit very strict enforcement of the above-mentioned laws, not only by carrying out preventive actions against acts of corruption or fraud but also in investigating those acts.

As regards the penal framework within the private sector, the Macau Penal Code states that passive corruption may be punished with imprisonment of up to one year or with a fine. Active corruption may be punished with imprisonment for up to six months or with a fine.

With respect to the public sector, passive corruption in relation to unlawful acts may be punished with imprisonment ranging from one to eight years. Passive corruption in relation to a lawful act in the public sector may be punished with imprisonment of up to two years or a fine of up to MOP 2.4 million ($300,500). Active corruption in the public sector may be punished with imprisonment of up to three years or with a fine.

What, if any, restrictions are there on repatriating profits to a company’s head office?

Macau is a free port without any exchange controls affecting the flow of capital and hence there are no restrictions imposed on the transfer and repatriation of capital and profits, which makes Macau an ideal place for foreign investment.

How well are IP rights enforced?

The protection and enforcement of IP rights are of paramount importance to Macau SAR’s attempts to attract foreign investment. This is reflected in the legal framework that governs this area, which aims to prevent and punish any IP violation, either through civil litigation or criminal prosecution.

The legal IP regime in Macau is governed by the Industrial Property Act, embodied in Decree-Law 97/99/M (December 13 1999). The act superseded the Industrial Property Code 1995, which was a Portuguese law that had been applicable in Macau until the new act entered into force. Under this regime, IP rights give rights holders full and exclusive enjoyment, use and disposal of their inventions, creations and distinctive signs within the limits, conditions and restrictions established by law.

As a member of the World Trade Organisation, Macau is required to introduce the appropriate legal mechanisms to protect IP rights. In addition, the Paris Convention for the Protection of the Industrial Property has been applicable in Macau since August 12 1999.

Pedro Cortés, senior partner and Manuel Moita Junior, jurist
Rato, Ling, Lei & Cortés – Advogados
Tel: +853 2856 2322
Email: cortes@lektou.com
Website: www.lektou.com