Malaysia’s recently approved General Consumption Tax, the MCT, is a big step towards streamlining the country’s sluggish economy and potentially making the nation’s casinos more profitable again. The law also encourages more growth-oriented economic zones such as Kuala Lumpur, Singapore, and other cities in the Southeast Asian region. This article discusses the impact of the new tax on Malaysia’s two largest and most successful casinos: the Kuala Lumpur Casino and UBK Diamond Casino.
Just like most governments, Malaysia imposes a General Consumption Tax (GCT) on all goods and services sold in the country. The GCT is based on a basket of rates including a local value added tax (VAT), an overseas value added tax (OVT), and an income-added tax (ITC). The rates of these taxes are formulated by the Malaysian Board of Trade and Finance (MBBT), which represent the interests of Malaysia’s gambling and business industries. The law allows them to either levy a flat rate or base the tax on the rate of income of the person or his family.
The Malaysian government plans to roll back the GCT to bring it more into line with other countries that have recently raised their tax rates. For instance, in July of 2021 the United Kingdom brought in a 10 percent increase on its gambling tax, which includes not just poker but all online games. The Gaming Industry Association of Malaysia predicted that the move will greatly affect the country’s casinos in the long run. The association also anticipates that the tax rate will spur more people to start their own online casinos in Malaysia, which will further increase the country’s problems on cash flow.
The MBT aims to replace the General Consumption Tax with a Consumption Tax of 15 percent. However, the Malaysian government has refused to adopt the measure automatically, thus requiring an act of parliament to increase the rate. With the resistance from the Malaysian authorities, there is some doubt as to whether the new tax will indeed result in increased revenue for the government. Whether the increased tax will really yield significant benefits for the government is yet to be seen.
Many economists predict that the new tax will only affect the small-scale operators and hotels on the edge of the coastal regions, which will be the direct beneficiaries of the new tax. On the other hand, the big commercial casinos in Kuala Lumpur, Singapore, Pattaya and Hong Kong will be affected by the increases on their taxes too. On the whole, however, the general population will only lose revenue to the government, which is the major effect of the changes.
The main argument against the new casino tax is that it effectively nullifies the existence of many legitimate businesses such as the full-scale casinos in Malaysia, which have been the mainstay of the country’s economy over the years. The argument is that by increasing the tax rate on gaming facilities the government is essentially denying the people of their right to enjoy entertainment at the casinos as they wish. The increase in tax rate is also seen as an attempt to control the growing number of offshore casinos that are now opening in different parts of the world. The increase in taxation on these casinos has been strongly opposed by many leading businesspeople in the country.
In response to the criticism, the Malaysian government has announced that it will be reviewing the implementation of the new tax law and the impact it will have on the country’s casinos. A commission is currently examining the changes made to the law and is expected to release its findings early next year. Meanwhile, the Malaysian government is working out a plan to tax foreign companies that operate gambling facilities in the country. This measure will come into force once the commission is finished drafting a new tax code for the purposes of encouraging foreign investment in Malaysia. It is hoped that the new tax will bring more foreign casinos into the country and thereby generate more jobs in the country.
Over the past few years, the Malaysian government has struggled to find a suitable way of incorporating the casinos into its economic structure. Despite its many difficulties, the government is slowly coming up with a solution. Recently the government has announced that it will introduce a one-time levy on the gaming taxes of all existing casinos in the country. Once this levy is implemented, it will be replaced by a permanent taxation structure that will include a new Malaysian tax on the gambling industry. At present, the Gaming Corporation is struggling to find ways of coping with the situation, and the government has promised to ease its burdens.
source https://trustedmalaysia.casino/malaysian-casino-tax-rate/
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