The proposed tax rate would start at 30% for operators with annual revenue of up to US$2.8bn, increasing to 40% for revenue between US$2.8bn and US$3.7bn, and to 50% for revenue between US$3.7bn and US$4.7bn.
The rate is significantly higher than the effective 7.75% Nevada casinos are required to remit, although lower (at least, initially) than the effective 39% rate paid by Macau casinos.
Morgan Stanley analysts warned that the rates could discourage Japan’s eventual casino licensees from “investing too much on capital expenditure due to lower return on invested capital.”
Other proposals currently being discussed include limiting the foot print of the gaming floor within any integrated resort to three per cent of total floor space with a cap of 15,000 square meters.
Politicians are also debating how best to limit the number of visits by locals to 10 times a month and to three times a week with a government-issued My Number identity card complete with an embedded IC chip.
Japan’s current legislative session ends on June 20, and it’s widely believed that passage of the IR Implementation Bill must be preceded by separate legislation to spell out specifics of Japan’s plans to limit the casinos’ potential negative impact on society.