Northern Cyprus casinos will see their taxes go down by half after the north’s parliament approved a two-part reform on how taxes are calculated, the Cyprus Mail reported April 25.
The island of Cyprus is divided between the north (Turkish Republic of Northern Cyprus) and the Republic of Cyprus in the south. The northern government’s legitimacy is only recognized by Turkey. There are dozens of casinos operating in the north.
A member of northern parliament, Erkut Sahali, told the Mail that the first part of the reform refers to the rate paid by casinos based on how many slot machines and tables they have. This rate has been increased by 17 percent. Simultaneously, however, the gaming services tax—a tax on gross gaming income after deducting gamblers’ winnings—will be chopped from 10 percent to 5 percent.
The law requires casinos to pay as much income tax as they pay in gaming services taxes, but the northern government argues that it can’t determine casino revenue in any way other than from figures provided by the casinos.
Sahali told the Mail: “[T]hey believe they have to accept whatever the casinos say as truth. However, the government also knows, and casinos are openly saying, that they earn much more in profits and gross income than they declare.”
The logic the government is following is that, after the cut in the gaming services tax, casinos will double how much gross income they report, and pay the same amount of tax.
This is not realistic, says Sahali. He declared, “Currently, 14 of the 31 active casinos pay more taxes than the minimum tax rate they can pay. Some even pay four times more tax than the minimum. Therefore, since the tax rate has been cut in half, the amount of tax paid by 14 casinos will also be cut in half.”
The northern Finance Minister Ozdemir Berova disagrees, calling critics “masters of distortion.”
This development is seen as a major competitive challenge for Melco Resorts & Entertainment’s City of Dreams Mediterranean, the only casino operating in the south.
City of Dreams Mediterranean Senior Vice President, Property General Manager Grant Johnson told Inside Asian Gaming that the new rates create a problem, even though the northern casinos are not really comparable to what Melco provides: “I think our product and our service are significantly better, but they’ve got a many year head start on us that we’re competing against, so we need to continue to bring players over and get players to experience what we’ve got to offer.”
