Gaming shake-up in Macau prompts calls for taxation rethink
Regulator ‘willing to listen’ as some argue for tax increases, while others want to see it reduced
The ongoing shake-up of gaming in Macau and the emergence of competition elsewhere in Asia has sparked calls for a rethink on casino tax collection in the world’s richest gambling destination.
As officials and casino operators gear up for a key gaming franchise renewal process which begins in 2020, the top gaming regulator in the former Portuguese enclave says he is “willing to listen” to different opinions on the amount and the manner in which the industry pays tax to the government.
At 39 percent, the tax take on casino gross revenue in Macau is one of the highest in the world among major regulated gaming markets. Direct taxes from gaming accounted for approximately 78 per cent of total government revenue in the first 11 months of last year.
However, the combined challenges of a switch from VIP-dominated to mass-market gaming, the opening up of markets in Singapore and most recently Japan, plus a crackdown on the flight of illicit capital from the mainland, are leading to new calls for a tax rethink.
Some in the industry have called for a gaming tax reduction while others argue for an increase.
In response to the calls, Paulo Martins Chan, who heads the Gaming Inspection and Coordination Bureau, told the city’s public broadcaster TDM that the government is willing to discuss a potential change “as long as it is beneficial to Macau’s gaming sector”.
“At the moment, we do not have any concrete plan [for a change in tax rates] but we are open to listen to the opinions of the sector,” Chan said.
Earlier this month, Wang Changbin – a scholar at the Gaming Teaching and Research Centre, at the Macao Polytechnic Institute – told a casino business website and newsletter that the Macau government should consider lowering the overall gaming tax burden.
Wang told GGRAsia that different tax rates for mass-market and VIP gaming revenue should be considered.
In 2015, Secretary for Economy and Finance, Lionel Leong Vai Tac,said the government would only look at possible gaming tax rate changes after the “mid-term review” of the industry which was completed in May last year.
Current casino licences expire on various dates between 2020 and 2022.
Deputy director of the city’s gaming regulator, Leong Man Ion, told local media the regulator plans to tighten requirements for the city’s casino operators in a bid to tackle suspicious money transactions on casino floors.
Meanwhile, a risk assessment report said Macau can expect “relative political stability and a reviving economy” this year.
The 2017 Asia Risk Assessment from Steve Vickers and Associates Ltd, a specialist risk mitigation, corporate intelligence and risk consulting company based in Hong Kong, added.
“Beijing’s current preoccupation with curtailing capital outflows, rising economic nationalism and the outside chance of a terrorist attack” on a Macau casino “still pose threats”.
The paper looks at risks for investors regarding 12 regional jurisdictions, including Macau, Hong Kong and mainland China.