Murky casino taxes stir controversy
July 20, 2013
Sri Lanka’s main opposition has slammed proposed tax breaks for casinos to be operated by James Packer’s Australia based Crown group and said the plans will be opposed in parliament.
Sri Lanka’s investment promotions ministry published a preliminary notice on tax breaks for Lake Leisure Holdings, where Packer’s Crown group is expected to invest and another project by Colombo-based John Keells Holdings.
The notices appeared to show that different tax regimes will apply to the two projects.
"The regulations issued by gazette providing tax relief are not the same for the two companies," legislator Harsha de Silva from the opposition United National Party told reporters following a government notice on proposed tax breaks for the two projects.
"For John Keells the (income) tax relief is only for the hotel and other services and not for the casino. I commend the stand taken by John Keells for refusing to a tax free casino. I think that is bigger corporate social responsibility than anything else.
The proposals published under Sri Lanka’s strategic investment law for large projects have to be approved by the cabinet of ministers and presented to parliament.
The government notice specifically mentioned that no corporate income tax breaks will be given to profits from a casino if John Keells Holdings starts one, but made no mention of an existing 5 percent flat tax set by betting and gaming levy law for gaming revenues.
In the case of Lake Leisure Holdings, a firm where Packer is expected to invest, the betting and gaming levy would apply but there was no mention of corporate tax for casino profits, except for a blanket exemption for profits of the entire businesses.
The strategic investment law was changed this year to allow it to exempt a company from the betting and gaming levy.
But it is not clear yet whether the JKH’s planned casino will or will not pay the betting and gaming levy and that the casino in Packer’s project will only pay gaming levy. Packer’s partner Sri Lankan partner Ravi Wijeratne has said that he will shift his casino there.
The details are expected to be made known to parliament later. Specific information on the projects have been hard to come by though casino regulation law was presented to parliament as far back as 2010, where rules are expected to set for a licensing.
Sri Lanka’s Investment Promotion Minister Lakshman Abeywardene has said earlier that Sri Lanka could change the taxes later.
"The UNP does not say no to everything," de Silva said. "We all want a better future for the people of this country. If in the process the government has to give some tax concessions to some investors we can debate in it parliament.’’
De Silva said Sri Lanka had very high taxes on food and it was not equitable to give tax breaks to people who were making money ‘hand over fist’.
He said Macao made 43 billion dollars in gaming with a tax close to 40 percent of casino revenues. Macao however does not have corporate tax on casinos.
"Look at Singapore - 22 percent tax plus corporate income tax of 17 percent. Look at Philippines up to 27 percent tax and they introduced in April a 30 percent tax. Las Vegas has a 35 percent tax on casinos."
Taiwan is planning to start casinos with a 13 percent tax. Sri Lanka has proposed only a 5 percent tax on gaming revenues. (LBO)
