Sri Lankan government’s proposed tax breaks for casinos criticized

sri-lanka-casino-taxThe Sri Lankan government’s push to open up the country’s casino market to international developers is raising the ire of opposition politicians. The country is already home to nine small scale casinos – many of them utilizing well-known names of US casinos like Bally’s and the Bellagio without the blessing of those operators – but is now looking to tempt some bona fide international casino names into developing large scale integrated resort casino operations. Next week, the government intends to introduce amendments to the Betting and Gaming Act to enable such operations, but opposition politicians are crying foul over the tax breaks casinos would receive under these amendments.

Harsha de Silva, an economist and Sri Lankan parliamentarian representing the opposition United National Party, is doing his best to express his concerns that the gaming law amendments are being rushed through parliament without proper debate. De Silva has criticized the government’s plan to impose a 5% tax on revenues, while exempting casinos from the country’s 12% value added tax and the 3% nation building tax. De Silva points out that basic goods like canned fish are taxed at much higher rates than casinos would pay under the proposed regime. “Is this equitable tax policy of this country?”

Lanka Business Online quoted de Silva saying he found it “most disturbing” that casinos would be brought under the country’s Strategic Development Act, which allows for “enormous tax benefits, in some cases as much as 25 years of tax-free status.” Under this proposal, casinos would enjoy income tax holidays, reduced economic service charges and lower duties on imported goods. Xinhua quoted de Silva as saying the government must come clean on its intentions now “since people cannot appeal to the Supreme Court to change a law once it has been passed.”

In February, Crown Ltd. boss James Packer was in Sri Lanka meeting with government ministers and touring potential sites on which to construct an integrated resort. It’s not clear whether Packer’s Sri Lanka intentions are for Crown or for Melco Crown Entertainment, the joint venture with Hong Kong businessman Lawrence Ho that operates casinos in Macau and is developing a casino in the Philippines’ Entertainment City project in Manila Bay. Sri Lanka would likely draw a large part of its business from neighboring India, where casinos are scarce.