Some investment analysts in Malaysia have issued what has now become an annual warning from the financial sector on the risk of tax hikes for the country’s only casino venue, Resorts World Genting (pictured in a file photo), operated by Genting Malaysia Bhd.
Hong Leong Investment Bank Bhd maintained its ‘neutral’ rating on Malaysia’s gaming sector and said that after recent hikes in so-called sin taxes for other sectors, Resorts World Genting was at risk of the same thing regarding gaming.
“With recent excise duty hike for breweries and tobaccos, we cannot rule out the possibility of a review in gaming tax up next,” the investment bank said in a note on Tuesday.
“Our estimation shows that for every 1 percent hike in gaming tax, financial year 2016 bottom line for Genting Malaysia Bhd and Genting Bhd will be negatively impacted by circa 3 percent and 1 percent, respectively,” said Hong Leong.
Its analysts were referring latterly to Genting group, the Malaysian conglomerate that is parent to Genting Malaysia.
Samuel Yin Shao Yang, associate director for equity market research at Maybank Investment Bank Bhd, separately told GGRAsia: “People are raising the tax issue now because the government is reeling from low oil prices.” Malaysia, in line with other oil producing countries, has seen its public revenues diminished by a global softening in crude oil prices.
Mr Yin clarified that Malaysia’s tax year runs from January 1 and that gambling at the Resorts World Genting property is subject to gaming tax levied at 25 percent of casino gross gaming revenue.
Since April 1, 2015, consumption of goods and services in Malaysia has been subject to a Goods and Services Tax (GST) at 6 percent.
Mr Yin said that GST on goods and services at Resorts World Genting is levied at an effective rate of 4.25 percent, rather than the national rate of 6 percent, because Genting Malaysia is allowed to offset some of the GST liability against its gaming tax liability.
Nonetheless he said that a decision by Genting Malaysia to absorb GST costs on behalf of its customers at Resorts World Genting, meant GST was costing the firm between MYR200 million (US$48.3 million) and MYR300 million per year.
Genting Malaysia is also subject to corporate tax at 24 percent of pre-tax profit, noted Mr Yin.
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”We are filled with gratitude and excitement as we approach our opening this June and hope to play a role in Las Vegas’s rebound after what has been an incredibly challenging year”
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