GGRAsia – S. Korea casinos can seek grace period on 2021 tourism fees

S. Korea casinos can seek grace period on 2021 tourism fees

Nov 16, 2021 Newsdesk Latest News, Rest of Asia, Top of the deck

The South Korean government is permitting in principle the option of casino operators in that nation delaying until “June 2022” payment of some Tourism Promotion and Development Fund fees that had been due this year.

The announcement of the grace period followed a national tourism strategy meeting on Friday, held by prime minister Kim Boo-kyum.

A representative at the Ministry of Culture, Sports and Tourism, the agency responsible for collecting the fees from casino operators in that nation, stated in response to GGRAsia’s telephone enquiry, that the grace period had been approved for “two casino entities”, but didn’t name them.

A representative of the Korea Casino Association, an industry trade body, separately clarified to GGRAsia by telephone, that the “entities” concerned, were two foreigner-only casino operators: Paradise Co Ltd; and Grand Korea Leisure Co Ltd.

According to a rule enacted by the ministry on April 1, 2021, any casino entity could apply for an extension on the payment deadline for the Tourism Promotion and Development Fund fees.

The move was in response to the business difficulties faced by the industry during the pandemic. In February this year, it had been reported in the South Korean media that the country’s casino industry – that mostly relies on foreign players – had been lobbying for more support from the government in the wake of 2020′s poor business results.

The government has nonetheless imposed conditions regarding a grace period on the tourism fund fees. The amount of a casino entity’s sales – measured inclusively across the March to August period immediately prior to what would normally be the September due date for payment of an instalment of tourism promotion fees – have to be under 50 percent of the sales achieved in the equivalent six-month period a year earlier.

The tourism fund fees are normally due from casino operators – in two equal instalments – in June and September respectively, of any given trading year.

The grace period to June 2022, applies to the fees that should have been paid in June and September this year, the Korea Casino Association representative told GGRAsia.

The association added, that could theoretically mean the two fee instalments owed for 2021 would need to be paid in June next year. If however, the casino entity asked – prior to May 2022 – for a further grace period on the September 2021 instalment, it might only need to make a single payment, i.e., for the amount due for June 2021.

According to data from the ministry, in calendar year 2020, Paradise Co paid KRW31.4 billion (US$26.6 million) in Tourism Promotion and Development Fund fees. Grand Korea Leisure paid KRW16.98 billion.

Paradise Co runs operations at Walkerhill in Seoul; Jeju Grand on Jeju Island; and Busan Casino in the southern port city of Busan. The firm also operates a foreigner-only gaming venue at Paradise City in Incheon, near South Korea’s main airport, under a venture with Japan’s Sega Sammy Holdings Inc.

Grand Korea Leisure runs three foreigner-only casinos in South Korea under the Seven Luck brand: two in the capital Seoul, and one in the southeastern port city of Busan.

The Ministry’s method for levying contributions from casino businesses for the Tourism Promotion and Development Fund follows certain protocols.

If casino businesses have annual sales revenue under KRW1 billion, the tourism levy is set at 1 percent of such revenue.

Those operations with sales revenue of between KRW1 billion, up to KRW10 billion, were required to pay 5 percent of sales revenue to the tourism fund.

Casino businesses with annual sales revenue over KRW10 billion, were mandated to pay 10 percent to the tourism promotion fund, according to ministry rules.