Macau’s Executive Council announced Friday that concessionaires will be asked to establish exclusive gaming zones for non-Chinese visitors, including specially designated gaming chips, in order to help determine the amount of revenue generated by foreign passport holders.
The measure forms part of a new administrative regulation that sets out the rules for a potential reduction in the tax rate charged on gross gaming revenues (GGR), with the government having previously stated concessionaires could receive a tax break of up to 5% for increasing foreign visitation.
At a press conference on Friday headed by DICJ Director Adriano Marques Ho, it was revealed that operators would be required to establish exclusive foreigner-only gaming zones and that the tax concession would only apply to GGR generated within these zones.
The announcement has already been met with some skepticism, with JP Morgan analyst DS Kim writing in a subsequent note that foreign GGR was unlikely to be meaningful and exclusive zones unattractive to visitors.
“Foreigners probably drove less than 10% of mass GGR before COVID,” he wrote, adding, “not many of them will likely want to restrict themselves to ‘foreigner-only zones’ (which we assume will only feature a small number of tables) as gamblers typically prefer to move between different tables to find the ‘pattern’ and ‘luck’ they favor.
“Operators are unlikely to make such space too attractive given low expected returns so we think it’s safer to model [Macau’s] gaming tax rate at (very) close to 40% of GGR, with no meaningful discount/waiver.”
The new administrative regulation is called “Regulations on the implementation of the reduction on gross gaming revenue of the concessionaire”.
The Executive Council said, “The regulation sets out the factors to be considered for the remission of [tax on] the gross gaming revenue of concessionaires, the procedures for the remission and the operation of the return and refund of funds.
“The specific criteria for reduction or waiver of funding based on the concessionaire’s success in developing foreign markets will be announced in the Gazette by the Chief Executive after he has received the advice of the Gaming Commission.”
The regulation is based on Article 22(3) of Macau’s new Gaming Law, which stipulates that the Government may reduce or waive up to 5% of the gross gaming revenue of a concessionaire if it succeeds in attracting foreign visitors. The 5% of GGR relates to a concessionaires’ 2% public fund and a 3% social security contribution to the government each year.
The administrative regulations will be effective from 1 January 2023.
