GEN Malaysia to review marketing spending after tax hike
Casino operator Genting Malaysia Bhd, which has a leading gaming ground near the Malaysian capital Kuala Lumpur, said in a Wednesday filing that it was “evaluating the overall impact” of additional taxes announced by the federal government on Friday.
The statement to Bursa Malaysia added that the company would take “appropriate next steps” that include “a review of the marketing spending and cost structure to mitigate the impact of the tax increases.”
Hong Kong-listed Cambodian casino operator Nagakov and Genting Malaysia’s brother, Genting Singapore, which runs the resort world Sentosa casino in Singapore, could benefit from a 10 percentage point tax hike imposed on Genting Malaysia’s gross domestic gaming revenue, Samuel Sa Yang, an analyst at Maybank Investment Bank, said in an email on Monday.
In said competitors may poach their businesses if Genting Malaysia cuts fees paid to junkets or rebates paid to direct VIP players at the country’s leading resort World Genting (pictured) to offset the effects of tax increases.
Many investment analysts said fees and rebates paid at casinos in the Asia-Pacific region are important competition areas as operators compete for dollar spending by rich Chinese and other East Asians.
Malaysia’s government said the annual casino licensing fee for Resort World Genting would rise from $120 million ($28.9 million) to $150 million ($150 million), along with the GGR tax rate hike announced on Friday.
“The new casino tariff rate of 35%, effective sales and services tax of 3.7%, corporate tax rate of 24%, and ‘Resorts of the Kings World Genting’ are the heaviest taxed casinos in Asia,” In said in a note on the matter on Sunday.
“Macao casinos are taxed at 39% of total gaming revenue, but they are exempt from corporate tax,” Yin added.
Genting Malaysia is currently working on a multi-billion dollar revamp of its Genting Highland properties over the years. The company also operates casinos in the United States, the Bahamas, the United Kingdom and Egypt.
Genting Malaysia recovered slightly in trading on Tuesday and Wednesday after the biggest single trading day drop on Monday since Friday’s tax announcement, Bursa Malaysia data showed.
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