The Macau government estimates that in 2023 it will collect only MOP10 million (US$1.25 million) in taxes on commissions that are paid by casinos to junkets, a 76.7 percent-decline from the MOP43-million in such taxation the government expects it will receive for fiscal-year 2022.
The information was disclosed in a report published by the city’s Legislative Assembly. It was part of the information included in the 2023 fiscal year budget proposal, approved by legislators in a plenary session on Thursday.
The government said the expected reduction in taxes on junket commissions was mainly due to the impact of the Covid-19 pandemic, as well as mainland China’s policy regarding “controls on capital flows”. It also cited an “adjustment” phase for the city’s VIP gaming sector.
The Macau government estimates the city’s 2023 casino gross gaming revenue will be MOP130 billion.
Junkets – also known as gaming promoters – are licensed by the Macau government to promote VIP gaming in the city’s casinos. Their services include: arrangement of gambling credit for players; collection on losses generated by high-roller play; and organisation of player accommodation.
A withholding tax of 5 percent is levied on commissions paid by gaming operators to junkets; but the withholding tax is not levied on the gross value. In Macau, junket operators are offered incentives to bring players to casinos by usually being offered either a share of the revenue, or a commission on rolling chip turnover; with the latter capped at 1.25 percent.
As of January 2022, there were 46 licensed gaming promoters – either entities or individuals – in Macau, down 45.9 percent over the past 12 months, according to the latest available data from the city’s gaming regulator. The number marked the ninth consecutive year of decline in the number of licensed junkets in the Macau market.
Such activity is still permitted for government-licensed promoters. But the sector saw a major drop off in business, coinciding with the high-profile detention – in November 2021 and January this year respectively – of two of the biggest junket bosses: Alvin Chau Cheok Wa, of the Suncity brand, and Levo Chan Weng Lin, of the Tak Chun brand, on separate allegations of running illegal gambling operations.
A criminal trial in Macau for Mr Chau and other defendants linked to the now-defunct Suncity Group concluded last month. The verdict – and any related sentencing – are scheduled for January 18.
A Macau court trial for Mr Chan and eight other defendants is currently in process.
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