Macau November Tax Revenue Up 203% Compared to October
A glimmer of hope for the fading casino industry in Macau was given by the latest financial data release by the city’s Financial Services Bureau, showing Macau government collected two times more in tax revenue in November compared to October.
November Twice as Good as October
The government in the Special Administrative Region (SAR) of China collected MOP2.83 billion ($354.6 million) in tax revenue from the gaming industry operators, 203% jump on a sequential basis. The data confirmed November as one of the best months in terms of gaming tax since January when the industry was severely impacted by the coronavirus outbreak, which led to a 2-week casino closure in February.
Gaming tax in Macau is not directly comparable to casinos’ gross gaming revenue (GGR) as there is a delay between the point of registering the GGR at the operators and the point at which the government records the tax paid on the operators’ gains.
Official budget data for the calendar year ending November 30 showed Macau government collected MOP27.2 billion from the industry, 73.9% down compared to the same period the year before. At the same time, aggregate Macau GGR posted MOP52.62 billion, 80.5% drop year-over-year.
Macau government implements a number of taxes on gaming industry operators. Casinos are usually taxed at 35% on the GGR, but when other levies are added, the effective rate goes to 39%. Levies are also applied to traditional Chinese lotteries, horse racing operations, and instant lotteries, while junket operations are charged with tax on the commission earned.
Second 2020 Budget Revision
Earlier this month, the Macau Legislative Assembly approved a second revision related to the fiscal 2020 budget plan, revising down the first one in April by 42%. The revision was necessary due to the prolonged post-pandemic recovery and the lack of travelers to the SAR which deprived casinos from revenue.
Dealing with the worst economic downturn in recent history, Macau’s government reported that it expected to collect an estimated MOP29.46 billion ($3.70 billion) in taxes from the administrative region’s casinos for the year, 71.1% less than what was forecasted for the year back in November 2019.
Macau also pointed out that it would collect an estimated MOP210 million in taxes from the city’s junket operators, 41.7% less than what was the original government’s forecast, with the decreases across the board prompting the government to consider a tax hike on casino GGR to 39%.
A tax hike on casino GGR may not be the only threat to the gaming business in Macau as speculation that the SAR is preparing to adopt the digital yuan as the only payment means inside casinos is making operators feel uneasy and is further adding to the gloomy outlook for the future.
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