The Macau government is now expecting to collect nearly MOP49.98 billion (US$6.26 billion) in taxes from the city’s gaming industry this year, according to a revised budget for financial-year 2020. Such forecast includes MOP45.50 billion in direct tax on the city’s casino gross gaming revenue (GGR), half of what the government had originally estimated in November last year, according to the document published by the Financial Services Bureau.
The Macau authorities have halved their forecast for the city’s casino GGR in full-year 2020 to MOP130 billion, due to the negative impact of the Covid-19 pandemic on the local economy, in particular the gaming industry.
The government taxes the GGR of Macau casinos at a rate of 35 percent, but other levies on the casino gaming gross raise the tax rate to 39 percent in effect. Other taxes on the Macau gambling sector include levies on the income of Chinese traditional lotteries, on horse racing and instant lotteries, and tax on commissions earned by operators of gambling junkets.
In its revised budget for 2020, the government said it now expected to collect MOP210 million in taxes on commissions paid to junket operators, down 41.7 percent from its original forecast. The amount of contributions from casino operators to special projects – including contributions to urban development plans, social security system and to promote the city’s tourism industry – is now anticipated to reach MOP2.60 billion, down 50.0 percent from the November forecast.
The Macau government collected just over MOP18.48 billion in tax revenue from the city’s gaming industry in the first three months of this year. The figure was down 37.6 percent compared to the prior-year period, showed official data published in late April.
The tax-take figures in a given calendar period and the city’s casino GGR in such a time frame are not directly comparable for a number of reasons. They include the fact that there is typically a delay between the point where GGR is recorded in Macau casino operations, and the point at which tax is registered by the Macau government as having been paid on such play.
Fitch Ratings Inc said in a recent report that it expected Macau to experience a “much deeper” economic contraction in 2020 than other ‘AA’ -rated peers “whose economies are less dependent on tourism”.
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Vitaly Umansky, Louis Li and Kelsey Zhu
Analysts at brokerage Sanford C. Bernstein Ltd