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Tax Revenues in Macau Record Decrease; Additional Issues Expected

March 16, 2020 TamaraTam

Tax Revenues in Macau Record Decrease; Additional Issues Expected

Macau is experiencing some tough times due to coronavirus effects. Its tax revenues have recorded a significant decrease which affects the casino industry. However, Secretary for Economy and Finance, Lei Wai Nong, mentioned that tax breaks will not be approved.

More About Result

According to the secretary’s words, local revenue generated from taxes on casino activity during the first two months of 2020 dropped to a peak deficit to MOP40 billion ($4.9 billion). It comes as a result of coronavirus issues which has left casino businesses without activity.

If we take a look at 2019 figures, we can see that Macau marked a recording surplus of MOP51.4 billion ($6.42 billion) in taxes, with MOP82.1 billion ($10.26 billion) in costs and MOP133 billion ($16.61 billion) in revenue. Gaming taxes made the largest share of the overall amount of MOP112.7 billion ($14.08 billion).

At the moment, local operators can only dream about similar results. Coronavirus has already resulted in 15-day closure of local gambling venues. Even in January, the Macau gambling industry recorded a significant decline of 11,3% compared to the same time in 2019. The first month of the year saw overall gaming earnings of MOP22.1 billion ($2.76 billion) and the government took about MOP8.8 billion ($1.1 billion) in tax revenues.

Recent Situation

The figures in February were more than disappointing. Macau gaming sector recorded an 87.8% decline compared to the same time the year before. It led to total revenue of MOP3.1 billion ($390 million) with gaming tax revenues contributing with minimal figures.

Lei Wai Nong noted:

“For now, we do not intend to introduce any [tax] changes.”

Secretary is responsible for the supervision of the local gambling industry. He explained that tax breaks could only occur if the city reregulates its gaming laws. In the recent interview, Lei noted that casino operators didn’t ask for a new tax deal.

Meanwhile, some casino representatives believe in a different scenario. Vice-chairman at Macau casino Galaxy Entertainment Group Ltd, Francis Lui Yiu Tung, observed:

“At present, we have not asked the Macau government on any [tax] concessions but we believe the government is already introducing a series of measures…for the community of Macau.”

Expectations

It is not clear when could we expect the recovery of the local gaming sector. According to the analysts’ opinion, it wouldn’t be possible before the third quarter of the year. IGamiX Management & Consulting member, Ben Lee, expressed his opinion:

“Assuming the epidemic peaks in the next two months, we might see a recovery in Q3/4. The underlying manufacturing sector in Guangdong province is fragile and will need to recover before we can start to see the players returning to play over more.”

Source:

“Macau tax revenues fall, but no break coming”, calvinayre.co, March 6, 2020.

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