By NATARIO McKENZIE
Tribune Business Reporter
MAJOR casino operators are “vehemently opposed” to suggestions that Value-Added Tax (VAT) should be levied on players via the gross sum bet, fearing this could make them “less competitive” than North American rivals.
And, while rejecting the recommendation from the New Zealand VAT consultants in their May 6 report to the Government, casino operators told Tribune Business they wanted guest winnings to be ‘zero rated’ for VAT purposes.
The Government is proposing to grant ‘zero rated’ VAT status to export industries only, but the tourism and hotel industries have argued that they are, in effect, services industries and should receive the same treatment.
This would enable them, and hotel-based casinos, to both re-claim the VAT they pay on their inputs and avoid imposing the levy (now 7.5 per cent) on customers. This newspaper was told that the casinos do not want to be treated as VAT ‘exempt’, as originally proposed by the Government, because this would leave them unable to ‘net off’ their input tax payments.
“I’m just concerned that taxing customer winnings may make us less competitive with casinos in North America,” George Markantonis, Atlantis’s top executive, told Tribune Business.
Mr Markantonis said he was also “vehemently opposed” to VAT on casino revenues. “In the end that would penalise gaming customers, because we would have to pass it on. It could also hurt our competitiveness.”
Robert Sands, Baha Mar’s senior vice-president of government and external affairs, in an e-mailed response to Tribune Business, said: “Gaming tax is agreed under respective Heads of Agreements. It is paramount to preserve the gaming industry in the Bahamas, and that inputs are not exempt and that guest winnings are zero rated.”
The new Zealand consultant, Dr Don Brash and John Shewan, in their May 6 report to the Government, called on it to abandon plans to ‘exempt’ casino gambling and all other forms of gaming from VAT.
They argued that it was “difficult to justify” exempting gambling from VAT when the likes of food and essential services would be taxable, even if casinos were already subject to their own specific taxation.
Messrs Brash and Shewan added that levying VAT on gaming would also simplify reporting requirements for Atlantis, Baha Mar and Resorts World Bimini, as their different services would not be subject to different tax treatments.
“The draft Bill exempts games of chance, gambling and lotteries from VAT, presumably on the grounds that these activities are already subject to the gaming tax,” the New Zealand consultants said of the Bahamian legislation.
“New Zealand does not exempt gambling activities from VAT. Special provisions of the New Zealand Act deem supplies to be made for VAT purposes when amounts are paid to participate in gambling.
“The practical effect of these provisions is that VAT is imposed on the gross amount bet, less prizes paid out. VAT is payable in addition to casino duty and a problem gambling levy.
“The Mission suggests that the Bahamas give consideration to bringing gambling into the VAT.”