Inside Asian Gaming

INSIDE ASIAN GAMING | January 2011 30 equal measure. (The entire development has a licence for up to 180 table games and 2,000 electronic games.) If the mass-market were the principal target, then Vietnam still has a long way to go to catch up with the visitor numbers available to Macau operators. Figures released by VNAT show that between January and July 2010, 2.9 million visitors came to Vietnam. That’s a 34.9% growth year-on-year. In the first eleven months of 2010, 22.7 million people visited Macau, a year-on-year increase of 15.1%, according to Macau’s Statistics and Census Service. Perhaps more encouragingly for Vietnam, arrivals from China were up 95.4% in the first seven months of 2010, though that is in part a function of starting from a low base. Vietnam currently offers a lot more air transport connections than Macau, but not nearly as many as Singapore. Changi Airport Group, the operator of Singapore’s main international air terminal, said in November it estimated 40 million passengers will have used its facilities during 2010. Taxing times It would be fair to say there is currently some opacity regarding the Vietnam government’s policy on gaming tax. An inquiry made by IAG to the Ministry of Finance indicated gaming tax is levied in Vietnam at 25% of the gross. Another source familiar with the Vietnam industry suggests the effective total tax on gross revenue is currently 34%. The source states: “A luxury tax accounts for the first 20% of the 34%. This applies directly to gross revenue. This is subject to change without notice and without rational analysis. A VAT [excise] tax applies in an uncertain manner. This accounts for the Hoi An market—soon to be trading in casino chips? In Focus HowVietnam’s current gaming tax rates compare with regional competitors Philippines Australia 25 19 to 27.5 (varies by state) Mass Gaming Tax % 15 10 to 12 (ditto) VIP/ Junket Gaming Tax % 2 (levied on gross for restoration of cultural heritage)** 10 (GST applied to operator margin for domestic sales. Exempt on sales to players from overseas) ^^ Excise Tax % Vietnam 20 (known as Special Consumption Tax) 20 (ditto) 14 30 Corporate Tax % Singapore 15 5 7 (known as Goods & Services Tax) 17 Macau 39* 39* N/A 12 Malaysia 25 25 N/A (but GST possible from July 2011)^ 25 30 (gaming operators exempt but pay variable licensing fees to PAGCOR 30 * incl 3-4%mandatory social and welfare contributions ^ Source: Ernst & Young report,‘Indirect Tax in 2010’ ** Source: Bagong Nayong Pilipino Manila Bay Tourism City terms of reference ^^ Source: Australian Taxation Office second 14% of the 34%. This is also subject to change without notice. “Tax on [corporate] profit is about 30% of net revenue. This may have changed in the last two weeks. No one can be sure what it will be next year. “There are some investment tax credits for investment in undeveloped areas, but whether you achieve any relief depends more on your political power than on promulgated rules or regulations,”adds the source. Vietnam’s tax on the gross may currently be (slightly) lower than Macau’s, but when Vietnam’s higher rate of corporate tax is taken into account, the burden on the industry is actually greater. Vietnam’s tax take is also very much greater than that of Singapore (excluding the casino entry fee imposed on Singaporeans), and that could be significant if the new Vietnam IRs want to compete regionally for VIP players. Also, unlike Singapore, the Philippines and Australia, Vietnam’s gaming tax regime currently makes no distinction between VIP and mass-market gaming. Those familiar withVietnamwill be aware that what gets announced in real estate circles and what actually gets built is not always the same thing. Interestingly, both the newcomer casino projects—like the more established Ho Tram—appear to have serious partners both on the operational and finance side. Vinaconex, the developer of the proposed Cat Ba Amatina project in the north of the country, is a large and politically very well-connected Vietnamese conglomerate with access to a lot of finance and financial expertise. Genting, named as a participant in the Hoi An project, already has extensive experience of international