NagaCorp faces surprise back tax bill

nagacorp-tax-billCambodian casino operator NagaCorp is facing an unexpected tax bill after local authorities announced a surprise audit.

On Tuesday, the Phnom Penh Post reported that the government had launched an audit of the NagaWorld casino after finding “discrepancies” in its tax filings. Specifically, the Ministry of Economy and Finance is looking at the property’s non-gaming revenue.

NagaCorp holds a monopoly on casino gambling within a 200-kilometer radius of the capital until the year 2035. The company also struck a sweetheart deal that sees it pay an effective tax rate of 2% on its gaming revenue, while paying a flat fee on non-gaming revenue that has grown from $30,500 in 2002 to $214k in 2015.

Last year, the government hit NagaCorp with a back-tax bill of $9.4m based on a reexamination of its non-gaming revenue. NagaCorp told investors that the payment was a “one-off” but the government reportedly plans to hit the company with a bill for an additional $10m payable on its 2016 non-gaming revenue and even more once the property’s Naga 2 addition opens in 2017.

Cambodia has been toiling over new gambling legislation for some years now, and while officials have stated that the existing tax rates will be maintained, NagaCorp chairman Timothy McNally has said he expects a new gaming tax rate of between 5% and 7%.

On Thursday, GGRAsia quoted McNally saying he couldn’t comment on “taxation matters,” but would say that NagaCorp are “very co-operative with the government in all aspects of our business.” Referencing the new gambling legislation, McNally said he expects Cambodia “will remain a tax-competitive jurisdiction.”

In other NagaCorp news, the company announced Thursday that it had made a placing and subscription agreement to sell 190m existing placing shares to not less than six parties.

The company says it will use the estimated $120m net proceeds of the sale to complete the TSCLK Complex, the retail, conference and hotel portion of the Naga2 expansion, which is expected to open in mid-2017.