Personal income tax on earnings derived from casino winnings is likely to be scrapped in Vietnam according to local media outlet Vietnamnet, quoting reports from the country’s National Assembly.
But the loss to the country’s tax authorities – estimated at US$9.52 million annually – is likely to be offset by a 5 percentage point increase in what’s known locally as special consumption tax, which applies to gambling. That could rise from 30 percent to 35 percent.
If the National Assembly approves the increase, it could add VND517 billion (US$24.62 million) to the state budget annually, according to figures quoted by Vietnamnet.
Taxes levied on casinos in Vietnam include a 30 percent special consumption tax on gambling, corporate income tax of 22 percent (due to be reduced to 20 percent from 2016), and value-added tax of 10 percent according to the country’s Ministry of Finance.
In practice the 30 percent consumption tax on gambling generally only applies to mass-market play. Currently locals are banned from gambling inside Vietnamese casinos, so those venues mostly chase foreign high rollers, and for that segment, there are tax deductions.
Stephen Shoemaker, chairman and chief executive of Asian Coast Development (Canada) Ltd, the developer and owner of The Grand Ho Tram casino resort southeast of Ho Chi Minh City, recently told GGRAsia: “With the international tour operator [junket] business we structured our deals effectively on discount on chips, and that discount is deductible for tax purposes.”
The idea of the discount system was to encourage more foreign players to come to the country, he said.
The executive added that for VIP play, tax was paid on gross gaming win net of the discount.
“Depending on the level of that, you are looking at an effective tax rate of somewhere between 11 percent and 13 percent [on VIP play],” he told us.
According to Vietnamnet, there is currently a 10 percent tax on casino and lottery winnings of more than VND10 million.
But the Minister of Finance Dinh Tien Dung was quoted saying it was “impossible” in some cases to determine people’s winnings, and therefore hard to tax them.
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"I am not going to speculate on what the [casino licence refreshment] tender requirements would be. I have full confidence and faith in the Macau government to treat everyone fairly"
Wilfred Wong Ying Wai
President and chief operating officer of Macau-based casino operator Sands China