ASX-listed Donaco International Limited will launch legal proceedings against Vietnam’s General Department of Taxation (GDT) in a bid to reverse the findings of a recent audit which could cost the company almost US$6 million in additional taxes.
The case revolves around the GDT’s determination that unredeemed chips deposited by customers must be counted as revenue. If upheld, the ruling would see Donaco – which operates Aristo International Hotel in Vietnam’s far north – facing a potential liability of almost AU$8.9 million (US$5.9 million).
The GDT had previously denied Donaco’s appeal application regarding the tax payable for floating chips, however the company explained in its 3Q24 results announcement on Friday that it had lodged a complaint with the local court and was this month granted leave to initiate legal proceedings to challenge the basis and validity of the GDT’s decision.
“The company will provide an update on the outcome of the legal proceedings in due course,” Donaco said. “The potential liability … could potentially impact Donaco’s financials if GDT’s decision is not overturned.”
Donaco, which reported a slight quarter-on-quarter decline in revenue to AU$10.3 million (US$6.8 million) and in EBITDA to AU$5.6 million (US$3.7 million) in Q3, also reiterated concerns over Thailand’s proposed bill legalizing entertainment complexes and specifically how it might impact the company’s core operation: Star Vegas in Poipet, Cambodia, near the Thai border.
“The potential legalisation of casinos in the region may affect DNA Star Vegas’ operations and cross-border tourism in the region,” it said. “Donaco is currently assessing how this development might impact its business.
“While there is no immediate effect on Donaco’s financials, should the bill pass, future implications may require re-evaluation, particularly as the majority of DNA Star Vegas’ patrons come from Thailand. Donaco will continue to closely monitor the situation and assess any potential impacts on its operations.”
Star Vegas saw its net revenue fall by 7.9% quarter-on-quarter to AU$6.30 million (US$4.2 million) and property-level EBITDA by 17.6% to AU$3.8 million (US$2.5 million) in Q3, with the company pointing to the registration fees of new slot machines in September as a key factor behind reduced profitability.
Aristo’s results remained largely with net revenue of AU$3.9 million (US$2.6 million) and property-level EBITDA of AU$2.5 million (US$1.7 million).
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