In what looms as another challenge for Melco Resorts & Entertainment’s European venture City of Dreams Mediterranean, casinos in the north of Cyprus will soon have their income tax halved, according to a report by The Cyprus Mail.
The move is said to be part of a twofold reform approved by the north’s “parliament” last week on how it taxes the region’s casinos. These reforms include a 17% increase on the rates paid for each gaming table and slot machine in operation, while the rate paid on gross income earned will be reduced from 10% to 5%.
The Cyprus Mail quoted Turkish Cypriot opposition party “MP” Erkut Sahali as stating the change is designed to discourage casinos from understating their income because, as per the “laws” of the north, casinos cannot pay less income tax than the amount they pay in gaming services tax.
“They believe they have to accept whatever the casinos say as truth. However, the government also knows, and casinos are openly saying, that they earn much more in profits and gross income than they declare,” Sahali said.
“For this reason, the government thinks that by halving the rate of its gaming services tax, casinos will have to report twice the gross income to pay the same amount of tax, thus increasing the amount of money recorded.”
However, “this idea is in no way compatible with reality,” he added. “Currently, 14 of the 31 active casinos pay more taxes than the minimum tax rate they can pay. Some even pay four times more tax than the minimum. Therefore, since the tax rate has been cut in half, the amount of tax paid by 14 casinos will also be cut in half.
“The tax paid by casinos which pay more taxes than the minimum will now be less than it was before the law was changed.”
While there are dozens of casinos in the north of Cyprus – a region whose autonomy is recognized by Turkey alone – Melco’s City of Dreams Mediterranean remains the only casino in the south.
In a recent interview with IAG, CoD Mediterranean’s Senior Vice President, Property General Manager Grant Johnson explained that the competitive rebates offered by the north’s casinos create stiff competition, even if their basic, smoke-filled gaming facilities pale in comparison to the Melco’s far more luxurious offering.
“People underestimate the competition from the north where [the casinos offer] all sorts of rebates,” Johnson said.
“I think our product and our service are significantly better, but they’ve got a many-year head start on us that we’re competing against, so we need to continue to bring players over and get players to experience what we’ve got to offer.”
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