The Macau government says, in a written response to a trade group for the Macau junket sector, that the authorities do not plan to offer relief on the burden of a 5 percent withholding levy on commissions paid by casinos to junkets. That is according to information provided by Macau junket-sector veteran U Io Hung to GGRAsia.
Under the old regulatory system that had been in place until December 31, junkets had been allowed to benefit from a legal provision that permitted them either a total or partial exemption from taxation on those junket commissions or remunerations that were paid to the junkets in kind, such as transportation, accommodation, food and drinks, and entertainment.
That had led junkets to be subject in effect to a lower net tax rate than they would otherwise have faced. But following regulatory changes effective from the start of this year, that had no longer been possible.
The Macau Gaming Promoter Professionals Association had submitted a in early February, a letter to the government asking it to consider some relief on the 5 percent withholding tax, arguing that the sector was already facing significant commercial challenges under the new Macau regulatory system for gaming.
The Macau government has now replied saying it “sees no conditions” currently to take such a step, Mr U told GGRAsia. The reply, received last week, was from Adriano Marques Ho, director of Macau’s casino regulator, the Gaming Inspection and Coordination Bureau, a body also known as DICJ.
Junkets had urged the government at least to make use of a provision in the existing gaming law that allows a Macau chief executive to authorise an exemption of up to 2 percentage points, from taxation on junket commissions or remunerations. Any such a period of exemption cannot in any case exceed a total of five years, the gaming law states.
Mr U said his group was considering further lobbying. He told GGRAsia: “We did not see why this levy on commissions is only imposed on us, but not on the direct VIP.” That was a reference to VIP gambling arranged directly by casino concessionaires. “That’s unfair competition” against traditional junkets, he added.
Under the revised legal framework that came into effect in January, each Macau junket is only allowed to partner with a single gaming operator. The latest legal framework also put an end to the revenue-sharing business model for Macau junket operators, who are now only allowed to earn commissions based on their gaming promotion service rendered to their partner concessionaire.
In the first quarter of this year, VIP baccarat – which in 2019 represented nearly half of all Macau gross gaming revenue (GGR) – accounted for almost MOP8.57 billion (US$1.06 billion) of Macau’s MOP34.64-billion GGR, a tally marking a market share of only 24.7 percent.
