1.Signed on December 18, 1998;
Entered into force on February 4, 1999.
Taipei Airlines Association and Air Macau Company Limited,
Noting that the responsible authorities in Taiwan and in Macau
intend to provide reciprocal relief from taxation to airlines r-
esident in Taiwan and in Macau, consistent with the principle of
reciprocal benefit, confirm the following understanding on how
the responsible authorities in Taiwan and in Macau will impleme-
nt the above noted intention:
For the purpose of this Memorandum of Understanding, unless the
context otherwise requires:
1.The term ”traffic” or ”air traffic”means any transport by
aircraft operated by a nominated airline, but in respect of a
nominated airline resident in Taiwan excludes any voyage for
which the principle purpose is to transport passengers, cargo
or mail between places within Macau, and in respect of a nomi-
nated airline resident in Macau excludes any voyage for which
the main purpose is to transport passengers, cargo or mail be-
tween places within Taiwan;
2.The term”airline”means a nominated enterprise carrying on t-
he business of transporting passengers, cargo or mail by airc-
3.The term”income, profits or revenue derived from air traffic
”means all income, profits or revenue from the operation of
aircraft in air traffic, including income, profits or revenue
that are incidental to the operation of aircraft in air traff-
ic, from the charter or rental of aircraft, the rental of air
cargo containers and related equipment and the maintenance of
air cargo containers.
1.The existing taxes to which this Memorandum of Understanding
will apply are:
(a) in Taiwan, the profit seeking enterprise income tax and the
(b) in Macau, the complementary tax (Imposto Complementar) and
the stamp tax (Imposto De Selo) .
2.This Memorandum of Understanding will be revised if any ident-
ical or substantially similar taxes which are imposed after t-
he date of signature of this Memorandum of Understanding in a-
ddition to, or in place of, the existing taxes.
3.In Taiwan, the airlines resident in Macau will be exempt from
tax on the income, profits or revenue derived from air traffic
earned in Taiwan. If an airline resident in Macau, is registe-
red for business tax, the air transportation services supplied
by the registered airline will be subject to a zero-rating bu-
siness tax (taxed at the rate of zero per cent), and a credit
is available for business tax paid on goods and services purc-
hased for business use. However, goods and services may be pu-
rchased by the registered airline on a zero-rated basis, prov-
ided the requirements of Article 7 to the Business Tax Law are
met. If the airline is not registered for business tax, the a-
cquisition of goods and services by the airline may still be
on a zero-rated basis, provided the requirements of the above
mentioned Article are met;
4.In Macau, the airlines resident in Taiwan will be exempt from
tax on the income, profits or revenue derived from air traff-
ic earned in Macau;
5.The provisions of the proceeding paragraphs will also apply to
income, profits or revenue from the participation in an airli-
ne pool or a joint airline business.
III.NOTIFICATION AND CONSULTATIONS
1.At the end of each calendar year, Taipei Airlines Association
and Air Macau Company Limited will notify each other of any s-
ignificant changes in the relevant tax laws which might affect
reciprocal exemptions and the principle reciprocal benefits.
2.Consultation may be requested in writing at any time by Taipei
Airlines Association or Air Macau Company Limited for the pur-
pose of amendment to the present Memorandum of Understanding
or for its application or its interpretation. Such consultati-
on will begin within 60 days from the date of receipt of any
such request and decisions will be by mutual consent.
IV.ENTRY INTO FORCE
1.This Memorandum of Understanding (MOU) will enter into force
on the later of the dates on which the respective contracting
parties may notify each other in writing that this MOU has be-
en approved by their respective authorities and will have eff-
ect with respect to taxable income, profits or revenue derived
from air traffic on or after 1 January 1996.
2.This Memorandum of Understanding shall continue in effect unt-
il 30 November 2000 unless sooner terminated as next Article.
Taipei Airlines Association or Air Macau Company Limited may te-
rminate this Memorandum of Understanding by giving written noti-
ce of termination to the other on or before 30 June in any year
for this Memorandum of Understanding to cease to have effect as
of 1 January of the following calendar year.
IN WITNESS THEREOF the undersigned, being duly authorized, have
signed this Memorandum of Understanding in duplicate in the Eng-
lish language at Macau this eighteenth day of December, 1998.
TAIPEI AIRLINES ASSOCIATION AIR MACAU COMPANY LIMITED
FRANK HSU WANG GUIXIANG
CHAIRMAN OF THE BOARD CHAIRMAN OF THE BOARD OF DIRECTORS