Posted on Jun 15, 2022 at 7:43am.
Last updated on: Jun 15, 2022 07:43 am.
As Macau updates its gambling laws, a draft version of the bill included a gross gaming revenue (GGR) tax of “up to” 40%. Now, in the latest version, any ambiguity is resolved as the current expression equals 40%.
Macau’s latest draft gambling laws set the tax on GGR at 40%, according to an update today. However, the law allows the incumbent Macau boss to approve a reduction in this tax burden by up to five percentage points.
Macau’s boss, currently Ho Iat Seng, can sign off on the cuts for “reasons in the public interest.” In particular, operators who attract customers from abroad receive the tax breaks.
Plan in progress since May
Chan Chak Mo, a veteran lawmaker from Macau and head of a committee reviewing the draft, mentioned the latter discretionary power during the Legislative Assembly session in mid-May GGRAsia. This was followed by a closed discussion with government officials.
Currently, operators pay a gambling tax of 35% plus up to 2% more to promote cultural, commercial and philanthropic causes. There is also no more than 3% for urban development and tourism promotion. Overall, the effective tax rate is typically 39%.
GGRAsia spoke to Carlos Lobo, a Macau-based specialist in Macau gambling law. He confirmed the new tax rate, adding that it will apply when new 10-year concessions come into effect.
The amended bill includes a 35% gambling tax and a 2% tax to promote cultural, social and economic purposes. There is also a 3% tax for urban development, tourism promotion and social security.
As a result, Lobo pointed out, casino operators would definitely pay 40% to the government. Most operators pay 4% of these additional contributions, with the exception of SJM Holdings Ltd. She pays 3% as a result of her commitment to dredging Macau’s waters.
The government has yet to clarify the details of how and when this mechanism will be implemented, the lawyer said. In fact, the ordinances that set the criteria for reducing or excluding the tax on social security contributions are part of a supplementary ordinance that the government is still drafting.
Concession extensions almost in place
According to local media, the Macau government will sign a six-month extension of casino operator licenses on June 23 TDM. This is expected to take place prior to the expiration of the current licenses, which are due later this month. The new extensions expire on December 31st.
The extension allows more time for the much-anticipated process of re-tendering the concession in the SAR of China to be carried out. While most assume the same six operators will keep their licenses, Macau has left the door open to change.
Wynn Macau, Sands China, MGM China, Melco Resorts, SJM Holdings and Galaxy Entertainment have already applied for the extension. Each costs $6 million due to the government’s delays in enacting the updated gambling laws.
Macau’s casinos took in $36.5 billion in 2019, more than six times that of Las Vegas. However, the COVID-19 pandemic and travel restrictions in Asia have had a major impact on casinos. As a result, GGR has been virtually non-existent on a few occasions in 2020.
China isn’t keen on the SAR’s reliance on gambling. As such, it has yet to be specified how Macau might conduct the license renewal process.