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Tax revenue from casino sector drops

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Traffic passes in front of NagaWorld hotel and casino complex in Phnom Penh. Hong Menea

Tax revenue from casino sector drops

Tax revenue from Cambodia’s casino industry cratered in 2020 as Covid-19 prompted the government to tighten entry restrictions, limiting the number of international visitors to the Kingdom, according to a Ministry of Economy and Finance senior official on March 21.

The ministry’s deputy director for financial industry Ros Phearun told The Post that tax collected from the industry more than halved to $40 million in 2020, from the $85 million logged a year earlier.

“As we’re all too well aware, the Covid-19 epidemic began in late 2019 and persists to this day. It’s pulverised all economic sectors, and the casino industry has sustained a crippling blow as well.

“Practically all of our casinos ceased operation in 2020, with only just seven or eight left scrambling to keep their businesses afloat. That’s why our revenue collection has dropped so much,” he said.

On August 18, 2019, Prime Minister Hun Sen issued a directive banning online and arcade gambling in the Kingdom by the end of the year, stating that such operations had provided foreign nationals with the opportunity to secretly run online money extortion scams.

The prime minister noted that licensed online gambling operators were rigging their games and threatening those unable to repay their gambling debts.

Coupled with lingering Covid-19 uncertainties, Phearun said the ban further drove down tax revenue from the sector.

Making matters worse still, the government suspended all casino operations from April until August-September, which saw a handful of businesses resume for the fourth quarter, he said.

“As a matter of fact, we expect tax collection from our casino industry to improve in 2021 thanks to our compliance with the recently-passed [Law on the Management of Integrated Resorts and Commercial Gambling], launched on November 14, 2020, with the expectation that [tax revenue] will double.

“We’ll collect [taxes] in a transparent way, but as Covid-19 continues to spread and slash tourist arrivals, we dare not predict what the revenue from this sector will be” for fiscal year 2021, Phearun said.

Earlier this month, Hong Kong-listed NagaCorp Ltd, the parent company of local casino operator NagaWorld Ltd, announced that it would pay out 100 per cent of net profits for the second half of 2020.

The dividend payment of $81 million, or 1.88 US cents per share, came as NagaCorp reported net profit of just over $102.3 million for the full-year 2020, on the back of a strong recovery in the second half posted by NagaWorld.

“For each six month period in the future years, the company shall review, assess and where appropriate, revise its dividend policy in accordance with the company’s revenues, global economic, Covid-19 conditions and other factors.

“This marks the group’s track record of uninterrupted relatively high annual dividend pay-out, with a total dividend distribution exceeding $1.5 billion since its IPO [initial public offering] in 2006,” NagaCorp added.

According to Phearun, 101 casino operators in the Kingdom have applied to renew their licences year-to-date out of a total of 193 registered by the end of last year.

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