Casinos in Sri Lanka are wondering if the government’s new tax regime is less of an attempt to raise revenue or more of a weapon meant to close their doors forever.
Sri Lanka’s several small casinos were already under financial pressure but certain local casino industry execs told the Sunday Times that they were considering permanently shuttering their operations due to their inability to make a reasonable profit.
One of these local operators, Dhammika Perera, who had planned to build a $350m resort casino in Colombo, converted his MGM Grand casino (no relation to the US company) to an art gallery in April, allegedly because the facility no longer made fiscal sense as a gaming venue.
Perera’s Colombo resort and two other resort-casino projects were conceived under the country’s previous political administration but were abruptly cancelled after President Maithripala Sirisena took power in January. The new government had made no bones about its lack of enthusiasm regarding casinos during the campaign, and immediately imposed a new Rs 1b (US $7m) fee on the country’s four small-scale casino operators.
Last month, the government continued kicking casinos in the groin by doubling the annual casino levy from Rs 200m to Rs 400m, while also imposing a 25% surtax on casino profits. To compensate for these new and increased demands, the government cancelled their threatened-but-never-imposed $100 casino entry fee. So, er, yay?
An Inland Revenue Department source told the Sunday Times that some Sri Lankan casinos made monthly profits of Rs 100m, so they can well afford the government’s new ransom demands. But casino employees are reportedly convinced that their jobs are not long for this world
Anyone who doubted the government’s intent should have listened to Finance Minister Ravi Karunanayake, who last week told the Nikkei Asian Review that the new fee structure was the government’s way of “snubbing” the casino concept. Karunanayake said the government was “stemming this and not encouraging casinos in the country.” You don’t say.