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IRD nets casinos, tax officers monitor roll of the dice
Casinos remain unlicensed, illegal operations yet to be regulated under new legislation passed in 2010.
Just two gaming and 46 betting centres have registered for the first time with the Inland Revenue Dept (IRD), in compliance with a new legal amendment passed this year, said Commissioner General Mallika Samarasekara last week.
There is still no gazette notification issued to regulate the casino industry in the country
She also said that IRD officers were now paying regular visits to gaming centres, to gauge the average monthly income of these institutions. The new registrations bring the total number of casinos listed with the IRD to six and betting centres to 1,094.
The registrations came ahead of the May 31, 2013, deadline specified in the Betting and Gaming Levy (Amendment) Act passed in April. While the changes became effective in January, betting and gaming centres were given five months to enter into IRD records.
The Amendment exempted gaming centres from Value Added Tax and National Building Tax, imposing on them a 5% levy on their gross monthly collections instead. It also increased the annual tax payable by casino’s earning a minimum of Rs 1 million a month from Rs 50 million to Rs 100 million.
The betting and gaming centres are expected to pay their dues monthly and to declare their returns on a quarterly basis, IRD officials said. They revealed that the IRD collected Rs 179 million in taxes from both categories in the first five months—January to May—of 2013.
“We have to go on the basis of what they declare, because it is only now that they are submitting their returns (after the amendment was passed),” said Mrs. Samarasekara. “We need time to get them into the net, because this is the start. We can say something by the end of the year. It’s still too premature.”
The tax chief remarked that even on Wednesday her officers had visited a casino in Colombo. “But it’s very difficult to see what their turnover is,” one of them said. However, the inspections will continue. “Under the earlier Act, we didn’t have many powers and couldn’t do much,” Mrs. Samarasekara pointed out. “Now, we can take action if they don’t comply.”
Meanwhile, IRD officials emphasised that betting and gaming sectors do not gain legality by registering to pay taxes. The parent law, which is the Betting and Gaming Levy Act of 1988, prescribes that taxes must be collected from every person in Sri Lanka who carries on the business of a bookmaker or the business of gaming, “whether lawfully or unlawfully”.
It also states that, “Nothing in the preceding provisions of this section shall be construed as conferring legality on any business referred to in this section, if such business is prohibited by law.” Casinos in Sri Lanka are, therefore, unlicensed, illegal operations that are yet to be regulated under new legislation passed in 2010.
President Mahinda Rajapaksa recently told newspaper editors that the Government would not issue new permits to open casinos. He did not mention, however, that even existing casinos in Sri Lanka are not licensed to operate.
While the Casino Business (Regulation) Act was passed in 2010, the Government is yet to gazette the regulations that would make the law effective. The legislation provides for the designation of areas in which persons engaging in the business of casinos can set up their establishments.
It also states that, from January 1, 2012, no person shall engage in the business of a casino “other than under the authority of a valid licence issued in that behalf by the Minister, and within a specific area to be designated by the Minister by Order published in the Gazette”. This deadline has lapsed long since.
At a meeting with newspaper editors on June 20, President Rajapaksa was asked for his policy on issuing casino licences. “As soon as we came to power, we decided that no new licence should be issued to open casinos,” he replied. “Also, we decided that all casinos operating should be brought into one location.”
“My policy is that no new licences will be issued for casinos,” he stressed. “We have not given liquor licences as well since coming to power. It is this government that increased the (annual) tax on casinos to Rs 100 million.” The President was referring to the Amendment to the Betting and Gaming Levy Act. To the question of whether a licence would be issued to Australian gaming magnate James Packer to open a casino in Sri Lanka, he replied, “He will not be issued a licence to operate a casino.”
When it was pointed out that Mr. Packer could operate with somebody else who already had a licence, the President shot back, “I can’t help that.” The United National Party flagged last week that the reference to using an existing licence was irrelevant because no such licences existed. While the Casino Business (Regulation) Act empowers an unnamed Minister to issue permits, the law has not been implemented.
Deputy Minister of Finance and Planning Sarath Amunugama said he thinks it is the Colombo Municipal Council (CMC) that has granted licences to casinos. “The CMC does not issue licences to casinos,” rebuffed Colombo Mayor A.J.M. Muzammil. “In the past, the CMC issued a club licence, the holders of which operated casinos for their membership. President Ranasinghe Premadasa brought a special gazette under which he cancelled the opportunity to operate casinos in Sri Lanka under a club licence.”
“There is still no gazette notification issued to regulate the casino industry or business in Sri Lanka,” he continued. “The Government must bring in a regulator and regulations to make this legal. We don’t issue licences. We only grant membership club licences. And nobody has made applications to us to operate casinos.”
The Sunday Times sought clarification from Ravi Wijeratne, Mr. Packer’s local partner and owner of the Marina Colombo casino. He said casinos were operating “on an understanding with the Ministry of Finance not to do bad things and to pay the IRD.”
“I think certain countries have thousands of documents,” he said. “Certain countries have two-line documents. We have been in business for 18 years and there hasn’t been a problem. So far, so good. We have a mutual understanding that we can run our operations, so long as we don’t do bad things.”
Mr Wijeratne has one casino, while millionaire businessman Dhammika Perera has two. The former said, it was news to him that two more gaming centres had registered with the IRD to pay taxes.
Casino is the best devil out of the worst devils: Basil R.
Economic Development Minister Basil Rajapaksa said, regulations will be drafted to give effect to the Casino Business (Regulation) Act in future. He also said, there was unnecessary agitation over the casino business. “This is not the biggest thing,” he maintained. “Compared to other things, nothing will happen to religion or our culture. This is the best devil out of the worst devils”.
“Narakama yakkungen hondama yaka meka,” he said, adding that prostitution, drugs and alcoholism were far worse scourges.
We must now learn to make good use of this devil. “Mey yaka hondata weda karanawa, poddak naraka karanawa,” Minister Rajapaksa elaborated. The answer was to strictly regulate the businesses, even through limiting access to Sri Lankans or restricting them to a certain time period.
The Minister emphasised that no new casino operators will be permitted to set up gaming centres, and that regulations will come. “If a foreigner is getting involved through a joint venture, he will want the best regulation, because he doesn’t want to risk his business,” he said. “A well regulated industry means he is also happy.”
The gaming zone has not yet been officially declared. “The centres have to be regulated one by one,” the Minister said. “To finalise the zoning, we have to take all the other places out of their existing locations and provide every facility in the designated area. That area should not have any residences or schools. We will have a “desert” area later, but first, we want to set up in the city.”
“We have been discussing some regulations with the Attorney General’s Department for the last three to four years,” he continued. “Wait, they will come. If we are introducing new people, we will definitely have them. But if something is going very smoothly and nobody shouts and says it is bad, why should we put our nose into that?”
“Betting takes place all over the country, in every place,” the Minister said. “And yet, the owners of betting centres are also the biggest donors to charity.” “Gaming is not good if a person gets addicted to it,” he opined. “Lottery is the same thing. We will guarantee that there will be no harm to society or to future generations.”
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