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Non-mandatory Central
Provident Fund System

Tax Concessions

For the purpose of determining the taxable profits of the employer with respect to the profits tax and salaries tax, the contributions paid by the employer towards the joint provident fund scheme are considered as the operating costs or the burdens of engaging in business, which are to be deducted from the taxable profits.

Temporary tax concessions
In order to encourage more employers to join the system as soon as possible, within the first three years of the implementation of the system, besides the above tax concessions, the employer can also enjoy an additional two times of tax concessions, which are to be deducted from the taxable profits.
 
Example:
• Assume that employee A and his employer have participated in the non-mandatory central provident fund
• Employee A’s monthly basic wage: 10,000 patacas
• Employer’s contribution rate: 5%
i.e. The amount of employer’s contributions: 10,000 patacas x 5% = 500 patacas
 
• Under the provisions of the existing tax legislation, the employer can enjoy a tax concession on the amount of contributions paid, i.e. 500 patacas.
Temporary tax concessions: 500 patacas x 2 (times) = 1,000 patacas
Therefore, the total amount deducted from the employer’s taxable profits is 1,500 patacas.