Posted on: December 4, 2020, 10:22h.
Last updated on: December 4, 2020, 11:21h.
When integrated resorts eventually open in Japan, the country won’t tax winnings accrued by foreign gamblers, says Akira Amari, head of the Liberal Democratic Party’s (LDP) Research Commission on the Tax System.
Amari made the comments during a recent press briefing, noting gaming properties in the Land of the Rising Sun need to be on par with international rivals in all aspects.
It would be meaningless if no one comes to the integrated resorts after building them,” said Amari. “We need to keep with international norms.”
LDP, Japan’s ruling party, is scheduled to introduce its new tax platform on Dec. 10 and the gaming levy policy will be included in that outline.
Under former Prime Minister Shinzo Abe, Japan legalized commercial gambling in late 2016. This declared Japan’s intent to woo major international gaming companies to build three plush integrated resorts comparable to the venues seen in Macau and Singapore.
Abe resigned last year, citing health concerns, and was replaced by Yoshihide Suga who was heavily involved in Japan’s gaming aspirations as one of Abe’s cabinet secretaries.
Taxes Problematic from the Start
In 2018, reports surfaced that Japan’s taxes on gross gaming revenue (GGR) could reach as high as 50 percent under a proposed progressive scheme. That’s far higher than the effective levy rates of 39 percent and 22 percent, respectively, in Macau and Singapore.
As for the withholding tax on foreigners’ winnings, that idea was pitched later but encountered stiff resistance from the LDP.
Macau and Singapore, Asia’s marquee gaming destinations, don’t tax winnings of either foreign or local visitors. The US and South Korea are the notable examples that have withholding tax programs for gamblers, regardless of what country those patrons are from.
The existing policy in Japan provides for taxation on winnings of locals. But it’s comparable to what they deal with when declaring profits from a pari-mutuel establishment.
“It should be fine to employ the method of tax exemption based on international standards,” said Amari.
Hoping Operators Notice
Quashing the foreign withholding tax could be a ploy by Japanese policymakers to keep the gaming industry’s big names interested in the country, an endeavor that’s been a struggle in recent months.
Though he didn’t specifically mention taxes, Las Vegas Sands Chairman and CEO Sheldon Adelson admonished Japan’s costs and procedures in pulling his company out of the Yokohama bidding fray in May. Three months later, Wynn Resorts said it’s closing its Yokohama office.
Last month, Genting Singapore expressed some reservations about pursuing a Japan gaming license, but those concerns appear to revolve more around construction costs and procedural hurdles than tax policy.
At a minimum, scrapping the tax on foreigners’ winnings would mean less work and more efficiency for operators. As for mirroring Singapore policy, that’s appealing to Japanese politicians, because they’ve long said if their country becomes a gaming hub, they want to emulate the Singapore model. Genting and Sands own the city-state’s two integrated resorts.