Southeast Asian casino operator Donaco International Ltd says it is disputing a charge of VND149.3 billion (US$6.3 million) in retrospective tax payments and fines imposed by the Vietnamese General Department of Taxation (GDT) for operations at its Vietnam casino, Aristo International Hotel.
According to details included within Donaco’s half-year financial report for the six months to 31 December 2022, the operating entity of Aristo, Lao Cai International Hotel JVC, received the decision from the GDT on 30 January 2023 requiring it to pay tax collections and penalties “primarily associated with the determination of tax payable for floating chips.”
The decision, Donaco said, was issued after an inspection conducted by tax authorities for the fiscal years ended 30 June 2019, 30 June 2020 and 30 June 2021 of Lao Cai’s historical tax treatment of floating chips for prior years.
“However management disagrees with this decision and is pursuing complaint procedures in accordance with the laws and regulations of Vietnam,” Donaco said.
“Management has submitted a complaint letter to the Vietnamese GDT on 6 February 2023. Response to this complaint letter is still pending, and there is significant uncertainty regarding its outcome. Management plans to lodge a complaint letter to the Vietnamese Ministry of Finance should the GDT reject their appeal.”
The company said its CEO, Lee Bug Huy, has also provided a letter of financial support to the company confirming he will continue to finance the operations of the group, including payment of the owed tax should it be unsuccessful in challenging the decision.
That support may prove crucial in the short-term after Donaco reported a loss attributable to owners of the company of AU$36.8 million (US$24.8 million) in 1H23, including an impairment charge of AU$26.7 million (US$18.0 million) mainly associated with the casino license at Aristo. Loss excluding the impairment charge was AU$10.1 million (US$6.8 million).
While the company’s Cambodian casino Star Vegas has been actively ramping operations since reopening in June, Aristo – located near a border with mainland China – is still operating on a limited basis.
“This is due to the fact that travel between Vietnam and China, the country from where the vast majority of Aristo’s patrons originate from, remains heavily restricted during the period as a result of residual COVID-19 measures,” it said. “Although the situation is due to improve as mainland China announced the full reopening of its borders and travel flow from January 2023, management expects that there will be delay in returning to pre-pandemic operations which is reflected by low forecast revenues until FY2024.
“Management assumes that the nearest border crossing between Vietnam and China will remain closed until March 2023, after which it expects that the Aristo casino will gradually recover when the border with China reopens.”
Donaco reported group-wide revenue of AU$9.9 million (US$6.7 million) for the six months to 31 December 2022, representing a 778% year-on-year increase.
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