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Macau junkets call for bad debt provision in taxation overhaul

Ben Blaschke by Ben Blaschke
Wed 14 Nov 2018 at 07:22
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Macau’s junket industry has called on the government to change its taxation laws in order to help junket operators overcome bad debt concerns.

Under current regulations, junkets are taxed on revenue rather than profit, meaning they are forced to pay tax on receivables whether those debts are collected or not.

Responding to comments made early Tuesday by DICJ Director Paulo Martins Chan that amendments to Macau’s gaming law was long overdue, Tak Chun Group CEO Levo Chan said addressing the bad debt issues faced by junkets should be seen as a priority.

“Taxation reduction is a complicated problem,” he said during a panel session at MGS Entertainment Show. “For the VIP market, the cost is high and the profits quite narrow which makes running our operations quite difficult for us, so if there is some amendment to taxation it can help the industry further develop. If we can reduce tax it will benefit the local gaming industry.

“In the VIP industry we are faced with large amounts of bad debt so it is an industry with high risk.

“For the banks and finance industries in Hong Kong, they have very strict requirements when it comes to loans but sometimes in Macau VIP guests pull strings in order to obtain large amounts of money, so it’s high risk. It makes it hard for us to follow rules and regulations or else those guests will go to other locations.”

Chan said that government figures should look at fixing the industry’s bad debt problems.

“What is the role of government? Perhaps working with industry to solve the issue of bad debts,” he stated.

“Is there a way the government can help us to collect those debts or include them in gaming tax reduction? I hope that in this area we can get some support from the government and get some clear laws and direction. For those people that don’t pay their debts, the government should help the lenders.”

David Group Vice-Chairman and Executive Director Weena Sae-Kee added, “At the moment there is no mechanism set up by the government to help bad debt and I would call for the government to help the VIP business because the VIP business is something that originated in Macau.

“In Macau it is legal for us to collect bad debts but as we know most visitors are from mainland China which makes it very hard to collect bad debts. We need a very sound mechanism that will protect the VIP gaming industry outside of Macau, such as collecting bad debts in mainland China through legal channels.

“Right now we have to resort to all sorts of approaches to collect bad debts. There are some criminals that come to Macau, borrow huge amounts of money and then escape and never come back. We look forward to help from the government.”

Discussing potential solutions to the industry’s debt collection woes, Macau Junket Association boss Kwok Chi Chung suggested a specific adjustment to Macau’s taxation laws whereby junkets would be offered a tax deduction in instances where bad debt was recognized by the court.

“That amount could then be included in the gaming tax deduction,” he said.

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Tags: bad debtDavid GroupJunketsLevo ChanMacauTak Chuntax
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Ben Blaschke

Ben Blaschke

A former sports journalist in Sydney, Australia, Ben has been Managing Editor of Inside Asian Gaming since early 2016. He played a leading role in developing and launching IAG Breakfast Briefing in April 2017 and oversees as well as being a key contributor to all of IAG’s editorial pursuits.

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