The Cambodian government is conducting an audit of casino firm NagaCorp Ltd’s gaming resort NagaWorld (pictured) in the capital Phnom Penh, in order to assess its tax liabilities on non-gaming operations, reports the Phnom Penh Post newspaper.
The news outlet said the audit followed the finding of what the newspaper termed “discrepancies” last year.
“The audit is ongoing and we have yet to finalise how much NagaWorld owes for their non-gaming operations,” the media outlet quoted Ros Phirun, deputy director of the finance industry department at the Ministry of Economy and Finance, as saying.
“The reason why we are doing this is because we found last year that they needed to pay more [in taxes],” Mr Phirun was additionally quoted as saying.
GGRAsia has approached NagaCorp for a comment on the news report.
According to NagaCorp’s annual report for 2015, filed in March with the Hong Kong Stock Exchange, the firm paid “income tax” of just under US$16.4 million in the 12 months to December 31, 2015. Its revenue for the period was just under US$503.7 million. Only approximately US$23.1 million of that revenue came from non-gaming operations.
Such non-gaming operations are expanding at the property. NagaCity Walk, a shopping complex linked to NagaWorld, had a soft opening earlier this month, according to local media. In May, NagaCorp acquired the Citywalk Group – owner of NagaCity Walk – at a consideration of US$94 million. Citywalk Group was held by Chen Lip Keong, NagaCorp’s controlling shareholder.
With regard to gaming earnings, NagaCorp is currently liable for flat tax payments – typically adjusted upward over time, according to conversations GGRAsia has had with management – rather than a tax on casino gross gaming revenue (GGR) as occurs in Macau.
According to the 2015 annual report, during that year NagaCorp’s “income tax” burden – as defined by the firm – included what it termed a “monthly gaming obligation payment” amounting to US$365,322 – 12.5 percent more than the equivalent US$324,731 monthly payment in 2014. NagaCorp also in 2015 paid a one-off “non-gaming obligation payment” of approximately US$9.4 million (it paid nothing under that heading in 2014).
A long-discussed gaming law to regulate the Cambodian casino industry – that Mr Phirun had said in February might be passed this year – is part of a strategy by the Southeast Asia country to attract more gaming investment and more tourists, especially visitors from China.
“There doesn’t seem to be any hard timeline with respect to the gaming bill that is expected to come out of the Cambodian legislature. We believe the bill will ultimately serve two purposes: to establish a proper gaming regulatory environment; and to establish a GGR tax,” wrote in a June note analyst Grant Govertsen of brokerage Union Gaming Securities Asia Ltd.
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”Given that the blanket casino closure [in Macau due to Typhoon Mangkhut] happened on an all-important weekend day… we expect that somewhere between MOP1.1 billion [US$136.2 million] and MOP1.5 billion in GGR will be lost”
Analyst at Union Gaming Securities Asia