Casino tax rates to rise; entry levies up by 50%

Singapore

THE government will be introducing a tiered casino tax structure with higher tax rates effective in March 2022, on the back of additional gaming provisions for Singapore's two integrated resorts (IRs) as they commit to a S$9 billion investment to ramp up facilities and attractions over the next few years.

This will be accompanied by a 50 per cent increase in casino entry levies for Singaporeans and permanent residents which kick in on Thursday.

The moves are understood to be pre-emptive measures to curb problem gambling, rather than as a means to increase fiscal revenue. Revenue from betting taxes (comprising taxes from casinos, lotteries, horse and sports betting, and fruit machines) was S$2.66 billion in FY2018, making up 3.6 per cent of the government's total operating revenue.

OCBC economist Selena Ling said that the hike in casino tax rates is "probably targeted more at promoting responsible gaming", based on the assumption that the contribution to fiscal revenue does not change dramatically over time.

As such, the changes in the casino tax rates "may not deliver significantly higher revenue" even with the massive IR project expansion, she added.

Gross gaming revenue is currently subjected to casino tax rates of 5 per cent for premium gaming and 15 per cent for the mass gaming segments. Come March 2022, there will be two tiers of casino tax rates.

For the premium gaming segment, the tax rate for the first S$2.4 billion of gross gaming revenue - or Tier 1 - will go up three percentage points to 8 per cent. For revenue exceeding S$2.4 billion, a tax rate of 12 per cent will apply.

For the mass gaming segment, the tax rate for the first S$3.1 billion for the mass gaming segment will go up 3 percentage points to 18 per cent. Revenue in excess of S$3.1 billion will be subject to a 22 per cent tax.

Should the IRs fail to meet their investment commitments, then a flat tax rate of 12 per cent will be slapped on the entire revenue from premium gaming, and a flat tax rate of 22 per cent will apply for the entire mass gaming segment.

Starting Thursday, casino entry levies for Singaporeans and PRs went up from S$100 to S$150 for the daily levy, and from S$2,000 to S$3,000 for the annual levy, with a five-year moratorium in place.

The income from casino entry levies have fallen over the years; it registered S$131 million for the year ended March 31, 2018, compared to S$134 million in FY17, and S$145 million in FY16.

The new taxes and levies are a result of additional gaming provisions granted to the IRs, in a move to ensure that they "remain commercially viable" as they pump in billions in their new attractions and facilities.

Today, each IR is allowed 15,000 square metres of approved gaming area. Marina Bay Sands and Resorts World Sentosa are now given the option to deploy an additional 2,000 square metres and 500 square metres respectively.

If the IRs exercise their options fully, the gaming area will increase from 30,000 square metres to 32,500 square metres. The approved gaming area as a proportion of total floor area will shrink from the existing 3.1 per cent to 2.3 per cent.

Within the gaming area, each IR is currently allowed 2,500 gaming machines. Marina Bay Sands and Resorts World Sentosa will be given the option to increase their allowable gaming machines by 1,000 and 800 respectively.

According to the IRs, the additional gaming provisions will target "higher-tier non-mass market players", who are mainly tourists.

Local visitorship to the casinos has declined significantly over the past decade, with a 50 per cent decline in 2018 compared to 2010. It is understood that the bulk of visitors are foreigners.

READ MORE: Singapore IRs bet on S$9b expansion; exclusive licences extended to 2030