Genting Malaysia Bhd, operator of Resorts World Genting, has said that its board decided to withdraw a judicial review against a Malaysian government decision regarding some promised tax incentives for its multi-billion-dollar revamp plan for the complex.
The information was filed in a Thursday statement to Bursa Malaysiaa, and at least one brokerage said it was lowering its estimates on Genting Malaysia’s earnings for 2019 and 2020.
The Resorts World Genting revamp – dubbed the Genting Integrated Tourism Plan (GITP) – was launched in December 2013. It is a multi-phase initiative described as a 10-year, MYR10-billion master plan, equivalent to about US$2.4 billion.
The casino operator had said in January – when it announced the tax appeal – that the High Court in Kuala Lumpur had granted leave to commence a judicial review of the relevant Ministry of Finance decision on the income tax question; and also granted a stay of that decision, “pending disposal of the judicial review application before the High Court”.
Genting Malaysia had previously submitted an appeal to the Ministry of Finance on the issue, but that appeal was turned down in September 2018.
A Thursday note from Maybank IB Research flagged that the casino operator’s decision to withdraw the appeal would “lead to higher corporate tax rates in the near future”.
“We lower our fiscal years 2019 and 2020 earnings-per-share estimates by 9 percent per annum but tweak our fiscal year 2021 earnings-per-share estimate upwards by 2 percent,” wrote analyst Samuel Yin Shao Yang.
Genting Malaysia has been facing other tax headwinds. In November, the Malaysian government budget plan said the casino licence fee paid by the company for its property was being increased from MYR120 million to MYR150 million per year, while the casino duty rate was to be raised to 35 percent from 25 percent of gross gaming revenue. The authorities also said gaming machine duties were being increased from 20 percent to 30 percent on gross collection.
Lim Kok Thay, chairman of Genting Malaysia, said this week in the company’s annual general meeting that he would be taking a 20 percent cut on his cash compensation. Media reports indicated that Mr Lim’s offer was in the light of challenging trading conditions linked to taxation issues in Malaysia.
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