Japan Shelves Policy To Withhold Tax On Foreigners’ Casino Winnings

Japan’s plan to withhold tax on foreign gamblers’ casino winnings has been shelved, for fear of scaring off casino investors, at least temporarily.

On Wednesday, at a meeting scheduled for this Thursday, Japan’s public broadcaster NHK announced that the government had decided to postpone discussion of the proposed integrated resorts of Japan. Casino taxation is supposed to be part of a broader discussion for fiscal 2020 on tax reforms.

Earlier this month, Japan introduced a scheme under which a withholding tax on any winnings would be levied on foreigners playing in a local casino. The aim was to ensure that the government had its fair share before the coop was flown by its foreign visitors.

To ensure compliance, the government planned to allow its casino licensees to register all gambling chip transactions–in the casino cage and at gaming tables–and to equate these statistics with the chip redemptions of individuals to decide if a gambler had won or lost.

Nevertheless, the ruling Liberal Democratic Party (LDP) in Japan and its coalition partners reportedly thought that the “business burden” of such provisions would be “heavy, and it may reduce investment in Japanese casinos.” The new plan is to ensure that casino taxation is further considered at some future date.

This fear is not wholly unjustified. From the moment the LDP announced plans to scrap the nation’s casino ban, international casino operators began wrestling with each other to pledge ever greater investment outlays in hopes of securing one of the coveted few casino licences Japan plans to issue–a maximum of three, at least initially.

The bidding war started with the obvious consensus limit of $10b but, as these things do, it swelled to the point that $10b is now considered the bare minimum for having the right people in the right markets recognising one’s ambitions.

The spending proposals have now prompted some operators to consider fleeing from the brink before it is too late. Rob Goldstein, president of Las Vegas Sands, recently warned that if the company were to pursue such a significant investment that promised uncertain returns, it might not be “prudent” for Sands shareholders.