Gambler-Friendly Tax Scheme Likely in Japan

Reports are the governing Liberal Democratic Party has moved away from an earlier proposal for withholding income tax from casino gambling winnings. The exemption is expected to be incorporated in a fresh set of guidelines scheduled for release this month.

Gambler-Friendly Tax Scheme Likely in Japan

Japan’s governing Liberal Democratic Party plans to issue revised casino tax guidelines this month that are expected to exempt gambling winnings from withholding.

Last year, the LDP government of former Prime Minister Shinzo Abe, who pushed for the legalization of casinos in the island nation of 126 million, considered making it mandatory for the operators that will be chosen for licensing to record customer chip purchases and wins and losses so that income taxes could be withheld.

But in response to concerns, notably from the Ministry of Land, Infrastructure, Transport and Tourism, that withholding will deter patronage, it appears the new government of Yoshihide Suga, who succeeded Abe In September, is walking back the plan.

“If we don’t decide a system of taxation it will be completely unpredictable, and no operators will want to be involved,” said Akira Amari, who heads the LDP’s tax investigation arm.

The government plans to award three licenses for destination-scale resorts with casinos as a tool to boost local economic growth through foreign tourism, and cities and prefectures across the nation are in the process of responding to an invitation to compete for them by submitting proposals by October 2021.

Recent developments include news out of Yokohama that the city has appointed former Japan Finance Minister Eisuke Sakakibara to chair a new Operator Selection Committee.

The committee, one several being formed in prospective host cities nationwide, consists of seven local leaders in fields such as corporate management, economics, city planning, conventions and meetings, architecture, culture and social responsibility.

The committee is charged with helping craft Yokohama’s proposal and make recommendations to pro-casino Mayor Fumiko Hayashi that will include its choice of a preferred operator.

Prior to the Covid crisis, the city expected its resort to attract up to 39 million visitors annually, create 119,000 direct and indirect jobs and generate total economic activity in the range of JPY1.6 trillion (US$15.17 billion).

Six companies submitted proposals at that time𑁋Las Vegas Sands, Wynn Resorts, Galaxy Entertainment Group, Genting Singapore, Sega Sammy Holdings and Melco Resorts and Entertainment𑁋later joined by a Japanese company, Shotoku Corp., and its partners.

Casino proponents had hoped to see the first resorts open in time for the 2020 Tokyo Olympics. But momentum foundered in Japan’s arcane legislative processes and a series of political scandals that hobbled the Abe government. Then the pandemic hit, forcing the cancellation of the Olympics and significantly diminishing the country’s tourism prospects as it devastated leisure travel across Asia.

LVS has since said it would not be pursuing a license in Japan and Wynn Resorts has said it was “pretty much ceasing” its efforts in the country as well.

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