Japan flags casino tax for non-resident foreigners

by Charlotte Lee Last Updated
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The Japanese government is considering a plan to withhold taxes on winnings by non-resident foreigners at casino resorts, according to sources close to the matter.

The Japan Times reports that the government is studying the tax system, because tracking down foreign nationals after they leave the country would be difficult.

The United States, South Korea and other nations employ a tax withholding system for winnings at their casinos, similar to the system Japan is looking to implement.

In the system, the government is also considering making it compulsory for casino operators to keep records of chip purchases and win-loss results.

Under the system, winnings at casinos will be taxed in a similar fashion to horse racing.

A tax will be levied on the difference between the value of the chips purchased and the amount of those converted back into cash.

The requirement to keep records of purchases and win-loss results is designed to prevent players from pretending the chips they won were ones they purchased or from leaving some chips with a friend inside the premises to reduce their winning amount.

The proposals will be included in the outline of fiscal 2020 tax reforms to be finalised by the ruling parties by the end of the month and implemented under tax system reforms after April 2021.

“If we do not decide on a certain framework in advance, it will affect the investment decisions of operators,” a government official said.

Japan plans to choose up to three locations at which to construct so-called integrated resorts – casino resorts that incorporate a large hotel, conference rooms and gambling areas.

The complexes are expected to start operating in the mid-2020s.

So far, Yokohama, Osaka and Osaka Prefecture, Wakayama Prefecture and Nagasaki Prefecture have declared their intention to bid.

Hokkaido recently pulled out of the race, citing local concerns about the project’s environmental impact, with many citizens also expressing unease over gambling addiction and other potential issues.

Melco shifts Japanese resort ambitions

Casino operator Melco Resorts & Entertainment is shifting its Japanese integrated resort ambitions away from Osaka to Yokohama, following the lead of some of its rivals.

Calvin Ayre reported on Wednesday that Melco Resorts and Entertainment chief executive officer Lawrence Ho announced that his company was adopting a “Yokohama first” strategy for its plan to acquire a Japanese integrated resort licence.

Ho said the company is choosing to “focus on creating an integrated resort in Yokohama city the likes of which the world has never seen.”

Ho called Melco Resorts and Entertainment “a suitable partner” that would assist Yokohama in establishing itself as “an international tourist destination.”

Melco Resorts opened an office in Yokohama earlier this month, and its new Yokohama focus means it is abandoning a plan for an integrated resort project in Osaka.

From Osaka to Yokohama

It was only several months ago that Melco unveiled a concept for a 49-hectare project on Osaka’s Yumeshima Island that included six hotels, a water-themed amusement park and a massive Japanese garden.

On Wednesday, Ho thanksed Osaka officials “for their consideration and for constructive dialogues that we have had with them” in the past few years.

But despite these “collaborative discussions”, Ho said Melco’s Japanese ambitions now lay elsewhere.

Ho’s news follows a similar move by rival Sheldon Adelson, whose Las Vegas Sands announced in August that it was ditching its Osaka plans in order to focus on landing an integrated resort licence in either Yokohama or Tokyo.

Philippine casino operator Bloomberry resorts also ditched its Osaka ambitions recently.

Osaka hasn’t totally become Japan’s integrated resorts ugly sister, as MGM Resorts chief executive officer Jim Murren formally adopted an ‘Osaka First’ strategy this spring.

Galaxy Entertainment Group, Genting Singapore and Wynn Resorts are also reportedly still keen on Osaka.

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