GGRAsia – NagaCorp to pay additional non-gaming tax: report

NagaCorp to pay additional non-gaming tax: report

Jul 14, 2017 Newsdesk Latest News, Rest of Asia, Top of the deck

Cambodian casino firm NagaCorp Ltd might have to pay an additional US$16.6 million in non-gaming taxes this year related to the operation of its flagship casino resort NagaWorld (pictured), reports the Phnom Penh Post newspaper.

The move follows completion by the Cambodian government of an audit of NagaWorld, a casino resort in the Cambodian capital, to assess its tax liabilities on non-gaming operations, stated the news outlet.

The media outlet quoted Ros Phirun, deputy director of the finance industry department at the Ministry of Economy and Finance, as saying that the final figure for additional non-gaming tax would still be subject to negotiation with NagaCorp.

“From now on and for every year we will make NagaWorld pay at least US$16 million on their non-gaming operations,” Mr Phirun reportedly said. “There is no longer any excuse for a company that is this profitable,” he added.

NagaCorp posted a 20.3 percent year-on-year increase in net profit to US$150.6 million for the six months to June 30, the firm said on Monday. The growth was fuelled by a 39.6-percent jump in gross gaming revenue – to US$386.8 million – at NagaWorld.

Non-gaming revenue at NagaWorld increased by 29.8 percent year-on-year to US$14.8 million in the first half of 2017, “primarily from higher occupancy and average room rates as well as better performance across all the food and beverage outlets,” NagaCorp said.

The Hong Kong-listed company stated in its Monday filing that it was not aware of any additional tax obligation on non-gaming operations so far this year. “As at the date of this announcement, there is no additional obligation, if any, for the period [six months to June 30],” it said.

Commenting on whether there might be an increase in taxation rates for NagaCorp’s operations, the firm’s chairman Tim McNally this week told GGRAsia, prior to the Phnom Penh Post report: “We have said on many occasions – and this is again the government speaking [official position] – there is mindfulness that Cambodia needs to maintain a competitive edge or advantage in keeping a reasonable or lower kind of tax base when you look at the level of [regional] competition.”

Mr McNally said the Cambodian government “has seen some significant growth in revenue over the years,” adding that the firm did not expect taxation to have “an adverse impact on our ability to have the type of success that we have had”.

NagaCorp reported US$30.7-million in non-gaming revenue last year, up 33 percent from 2015. For full-year 2016, the company paid a “non-gaming obligation” of US$214,338 per month, according to the firm’s annual report. In addition, the company reached an agreement with Cambodia’s Ministry of Economy and Finance to pay an additional US$16.6 million related to its non-gaming operations last year.

According to NagaCorp’s annual report, the non-gaming obligation payment is considered as a composite of various other taxes, such as: salary tax, fringe benefit tax, withholding tax, value-added tax, patent tax, tax on rental of moveable and unmoveable assets, minimum tax, advance profit tax, advertising tax and specific tax on entertainment services.

NagaCorp said in its latest annual report that it paid a “gaming obligation” of US$410,987 per month to the government in 2016, since a gaming law – that will cover taxation of gaming activities – “has yet to be promulgated”.

Regarding the awaited Cambodian gaming law, Mr McNally told GGRAsia: “They [the authorities] anticipated that the gaming law would be passed in the first half of the year. That hasn’t happened yet. So all I would say is we are monitoring it [the situation] and awaiting it just like others… It will be regulatory and also address taxation.”