Japan to ditch casino winnings tax for int’l gamblers

Japan’s casino aspirations got a boost on Thursday after the government indicated it would scrap controversial plans to tax the winnings of international gambling tourists.

On Thursday, Liberal Democratic Party (LDP) member Akira Amari, who heads the government’s Research Commission on the Tax System, informed reporters that the LDP was walking back its original plan to impose a withholding tax on non-resident foreigners lucky enough to be carrying gambling winnings through customs on their flight home.

Amari said the change will be incorporated into Japan’s fiscal 2021 tax package, which will be cobbled together next week. To be clear, Japan signaled an intention to scrap the foreigner tax last year at this time while it was compiling the fiscal 2020 tax plan, so maybe wait until the ink is dry on this one before popping the champagne corks.

The Kyodo News agency quoted Amari saying “it would be meaningless if no one comes to the integrated resorts after building them,” adding that Japan’s as-yet-unbuilt casinos must be “on par with international standards.”

Japan needs to do something to kickstart the waning enthusiasm among prospective integrated resort operators. After kicking off the Japan casino craze by promising to spend $10b building a local pleasure palace, Las Vegas Sands abruptly withdrew from contention in May, claiming Japan’s “framework” for casinos – including a 30% tax on gaming revenue – “made our goals there unreachable.”

In addition to Sands, Caesars Entertainment, Wynn Resorts and Genting Singapore have also bowed out for one reason or another. While companies such as Melco Resorts & Entertainment remain keen, MGM Resorts’ new CEO Bill Hornbuckle recently mused as to whether such a significant investment was still “prudent.”

Japan’s casino plans were going off the rails even before the pandemic thanks to an increasingly dubious public and a scandal involving politicians accepting bribes from gambling operators. Then casino champion Prime Minister Shinzo Abe abruptly resigned in August and, while his successor insisted it was full speed ahead, more momentum was lost.

Japanese communities still interested in hosting an integrated resort won’t even have the chance to submit a formal application to the government until October 2021, which leaves plenty of time for any number of new obstacles to appear on the casino horizon. Your move, Mothra…

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