As the gaming industry in Macau continues to face challenges, the government has introduced a new provision in the upcoming Macau gaming law revisions. This provision, which allows the Chief Executive (CE) to determine a minimum amount of tax per table and per slot machine, could potentially increase the gaming tax rate by stealth.

In this article, we will explore how this provision works and what it means for the concessionaires operating in Macau's casinos.

The New Provision

According to Articles 20(4) to 20(6) of the draft Macau gaming law, if a concessionaire's actual gross income does not meet the minimum amount set by the CE, they will be required to pay a special premium equal to the difference between the special tax for games of chance calculated based on their actual gross income and that of the minimum amount.

The minimum annual gross income per gaming table and gaming machine is determined by a dispatch issued by the CE in the Official Bulletin of the Macau SAR. There is no guidance on how often the CE will issue such a dispatch or what basis he will use to determine the minimum gross income per gaming table and gaming machine.

Concerns for Concessionaires

The new provision raises concerns for concessionaires, as it could potentially increase their tax liability without prior notice. In a scenario where the CE sets the minimum annual gross income based on his estimate of MOP$130 billion GGR for 2022, but actual GGR turns out to be MOP$84 billion, the special gaming tax rate would increase from 35% to 54%. This could have a significant impact on concessionaires' profitability.

Potential for Efficient Table Utilization

Some might speculate that the new provision is not about increasing the gaming tax rate by stealth but is instead about encouraging efficient table utilization. It might be a mechanism to encourage concessionaires to give tables they are not currently using back to the government, so that they don't need to worry about generating a minimum GGR on tables gathering dust in a back room somewhere.

Need for Clarity

While this possibility exists, it would be nice to have some clarity from the government on this provision. The way the law currently stands, the potential is there – in theory at least – for concessionaires to suffer a very nasty surprise.

The gaming industry in Macau is already facing challenges due to the COVID-19 pandemic and other factors. Any changes to the tax rate or gaming regulations could have significant implications for concessionaires and the overall economy of Macau.

In our next article, we will continue to explore the potential implications of the new provision and what it means for the gaming industry in Macau.