Malaysia seen trimming gaming taxes to offset GST

Malaysia may adjust gaming taxes to offset the expected impact of the implementation of the Goods and Services Tax (GST) system from April 1, 2015, according to analysts reported in local media.

TA Securities Holdings was cited as saying that the government is likely to make "downward adjustments” to gaming tax in the 2015 budget to allow companies such as Genting Malaysia Bhd to better withstand regional casino competition.

The analysts said at present Genting Malaysia is paying gaming tax of 25 percent, which is seen as "moderately high in the region."

It said that there may be implications for the company’s capital spending plan if there is no cut in gaming duty, as GST will have a major impact on profitability.

The government may also make some adjustment in the gaming tax, or pool betting duty, imposed on number forecast operators (NFO). Currently, NFO operators in Malaysia are paying two forms of sin taxes: a gaming tax of eight percent on total ticket sales and pool betting duty of eight percent on net revenue.

The gaming tax has remained unchanged since 1998, while the pool betting duty was last revised from six percent in June 2010.

“For Berjaya Sports Toto Bhd, the implementation of GST and the reduction in corporate tax rate to 24 percent in 2016 will likely reduce our FY16 earnings projections by 5.4 percent if the company makes no adjustment to the prize payout,” TA was cited as saying.

 

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