Macau officials will welcome discussions on the potential reduction of casino taxes, after a local scholar said last week that a change in the city’s existing taxation system will be good for the industry.
Paulo Martins Chan, Director of the administrative region’s Gaming Inspection and Coordination Bureau, commented this weekend that they are not planning to implement any changes for now. On the other hand, the government is ready to hear any opinions and suggestions that might benefit Macau’s casino industry. And as Mr. Chan stated, if officials find fit, they may introduce amendments to the city’s taxation system before the renewal of the six casino concessionaires’ licenses.
Under Macau’s gambling law, there six companies that are allowed to operate casinos in the administrative region. They are set to have their licenses renewed between 2020 and 2022.
Macau taxes its gambling venues at 39% on gross gaming revenue. The greater portion of the money is directed to the city’s coffers. A smaller, 4% share, is contributed to community welfare initiatives.
According to industry representatives, the potential tax reduction is a necessity, if Macau wants to stay competitive to new regulated jurisdictions like Japan. Japanese lawmakers legalized casino gambling in the country late last year, thus opening it for interested international investors.
Macau’s economy is strongly dependent on tax revenue from its more than 35 casinos. According to official data, tax revenue from gambling accounted for almost 80% of the city’s total revenue for the eleven months ended November 30, 2016. This is why it will be curious to see to what extent the government will be ready to lower taxes, even if this would be good for the local gambling market.
The city’s casino industry finally started recovering in August 2016 after more than a two-year extreme drop in revenue. Urged by the local government, operators redirected the focus of their business towards a more mass market- and family-friendly offering. The opening of the Wynn Palace and The Parisian Macao integrated resorts bolstered the industry’s rebound and the upcoming launch of MGM Cotai is expected to further draw mass market players and non-gambling customers to the city and improve its economy.
