Heavy taxes could send local casinos reeling
The soon-to-be imposed billion rupee one-off special tax recommended in the 2015 interim budget on four existing casinos could drive these casinos to the ground, gaming industry sources said. However the new government’s proposed move to restrict casinos only for foreigners and ban locals from entry as announced by new Tourism Minister John Amaratunge will not affect the business badly as locals represent just four per cent of the clientele, a casino owner told Business Times. Indians and Chinese are the main patrons, together contributing about 40 per cent of the revenue at these casinos. The remaining 56 per cent in generated from other foreign nationals.
“But we may be forced to close down our casinos as a result of these heavy taxes,” he said adding that one owner (businessman Dhammika Perera) has already closed down the MGM Grand Casino at Bambalapitiya Junction (on Galle Road). That premises is to be to be used for another purpose by the owners.
With the special tax bill paving the way for the collection of the Rs.1 billion tax now expected to have smooth passage in parliament after the induction of the coalition government, the Inland Revenue Department (IRD) expects to collect Rs.4 billion from the four casinos. This bill was not presented in parliament in February-August 2015 owing to fears that the opposition UPFA will defeat the bill, a situation that doesn’t exist anymore.
Casino owners will also have to pay a gaming levy of 10 per cent and an entrance fee of US$ 100 from those who enter the casino premises in accordance with the 2015 budget proposal. Expected revenue from this proposal is around Rs.2.5 billion.
Colombo casinos are still not charging the entry levy and their operations will not be affected even after the commencement of recovering this levy, a casino owner revealed.
An amendment to the country’s Betting and Gaming Levy was gazetted on March 30 stating, “Every person who carried on the business of gaming in Sri Lanka for any year commencing on or after January 1, 2015, shall collect a levy of US$100 or its equivalent in any other convertible foreign currency or in Sri Lanka currency from any person who enters such place of business of gaming.”
This amendment needs to be passed in parliament for it to become law and the recovery process of the levy from casinos will begin afterwards, IRD sources revealed. IRD Commissioner General Kalyani Dahanayake said that casino owners are paying all current taxes and the department is following a strict monitoring process preventing tax default.
A separate division is handling the recoveries from the betting and gaming levy and other related taxes, she disclosed adding that tax compliance of casino and betting centre owners was satisfactory. The Ministry of Finance confirmed that a total of 904 individuals and institutions have opened tax files based on the gaming businesses they are conducting in the country.
The Ministry has already issued a statement confirming a special licence to operate gaming is “not required” in Sri Lanka and falling in line with the Inland Revenue Act was sufficient.
Sri Lanka’s casino industry is no doubt steeling itself for more bad news. In addition to cancelling the new approvals and imposing an entry levy, the new administration has said it also intends to review the current casino operations.