The Macau government collected nearly MOP272.4 million (US$33.9 million) in taxes on commissions paid by casinos to junkets in 2016, according to the government’s budget execution report. That represented a decrease of 19.3 percent compared to the previous year, the data show.
The figure was included in the budget execution report submitted by the government to the city’s Legislative Assembly. No explanation for the decrease was provided.
Macau’s accumulated casino gross gaming revenue (GGR) for 2016 stood at nearly MOP223.2 billion, a year-on-year decline of 3.3 percent. Revenue from the VIP segment amounted to approximately MOP119 billion last year, down 6.9 percent from 2015.
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.
Additionally, the Macau government can authorise a total or partial exemption from taxation on junket commissions or remunerations that are paid in kind, such as transportation, accommodation, food and beverages and entertainment.
The number of licensed junkets in Macau has been shrinking since 2015. The total fell from 183 in January 2015 to 141 in January last year, and it declined further to 126 in January 2017, according to a list of licensed operators published by the city’s gaming regulator, the Gaming Inspection and Coordination Bureau. The figure includes both companies and individuals licensed as junkets.
In its budget proposal for 2017, the Macau government had said it anticipated pocketing MOP200 million in taxes from junkets this year. The Macau government is historically conservative when forecasting gaming-related tax revenue in its yearly budgets.
Macau market’s GGR tally for the first nine months of 2017 stood at nearly MOP193.38 billion, up 18.8 percent from the prior-year period, according to official data. In the nine months to September 30, VIP revenue is up 24.2 percent year-on-year, to about MOP110 billion.
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”“We believe continued improvement in sequential (weekly/monthly) gross gaming revenue trends will serve as a tailwind for Macau stocks”
Carlo Santarelli and Steven Pizzella
Deutsche Bank analysts