Genting Malaysia says it is still assessing the implications of major tax and levy increases to be imposed on the casino operator from 1 January 2019.
Malaysian Finance Minister Lim Guan Eng revealed last Friday much higher than expected fees to be imposed on Genting Malaysia during his budget speech, with the annual casino license fee to rise from MYR120 million (US$28.8 million) to MYR150 million (US$36 million) and the tax on gross gaming income to jump from 25% to 35%.
Although increases had been expected, the size of the jump caught industry analysts by surprise.
Commenting for the first time on the tax hike in a filing to the Malaysian Bourse on Wednesday, Genting Malaysia said it “is assessing the full implications of the additional taxes and will take the appropriate next course of action which includes a review of its marketing expenditure and cost structure to mitigate the impact of the tax increases.”
Brokerage Nomura said earlier this week that it estimates an “MYR600 million to MYR700 million (US$144 million to US$168 million) impact on Genting Malaysia EBITDA and net income for fiscal years 2019 and 2020, which would offset a big chunk of the earnings growth expected from Genting’s substantial capital expenditure into new capacity over the past five years.”
The brokerage was highly critical of the size of the hike, adding that the increases “diminish the investment appeal of the gaming sector.”
Genting Malaysia is in the midst of a comprehensive makeover of Resorts World Genting under its Genting Integrated Tourism Plan (GITP), with the company expecting to tip in almost MYR10.5 billion as part of the 10-year plan.
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