The South Korean national government has rejected a call for higher taxes in Jeju, which spells good news for the eight incumbent casinos in the region, says Union Gaming.
The rejection of the gaming policy package, which included a doubling of the tourism tax (GGR tax) to 20 percent, the implementation of 3-year license renewal audits and restrictions on the transferability of casino licenses is especially positive for Genting, which plans to open Resorts World Jeju in late 2017.
According to Union Gaming analysts, the national government likely rejected the package so as not to scare off billions of dollars of IR related capital in the region.
However, the Jeju government has made moves to increase the effective tax rate regardless, said the brokerage.
“Specifically, Jeju is phasing out the ability for casino licensees to pay taxes on GGR after deducting junket commissions.”
Union Gaming estimates this will cause the effective VIP GGR tax to go up to 10 percent, up from 4 percent under the old scheme.