http://www.tax-news.com/news/Singapore_Lowers_Fruit_Machines_Duty____47787.html
Singapore Lowers Fruit Machines Duty
by Mary Swire, Tax-News.com, Hong Kong
Tuesday, February 15, 2011
During a second reading of the Private Lotteries Bill 2011 in parliament, Singapore’s Second Minister for Finance and Transport, Lim Hwee Hua, announced that the government will lower the private lottery duty for fruit machines to 9.5% of actual gross turnover, instead of the 12% planned earlier.
She said that, in his 2006 budget statement, the Minister for Finance had announced a change in the taxation basis and tax rate for fruit machines. Specifically, he announced a private lottery duty at 12% of actual gross turnover of fruit machines, rather than 30% of deemed turnover. The 12% rate was then set so as to be revenue-neutral to the government.
It was considered that the technology of fruit machines has evolved, so that the government could make the shift in taxation basis from deemed turnover to actual gross turnover. However, the implementation of this new tax treatment was subsequently deferred to receive further feedback from the clubs.
Lim noted that, since the opening of the casinos in the integrated resorts (such as Marina Bay Sands and Resorts World Sentosa), the gaming landscape has changed and clubs have seen a decrease in fruit machine revenue. The casinos are taxed on their gross gaming revenue, which is the basis of taxation adopted for casinos in other major jurisdictions. In addition, given that the casinos are targeted mainly at overseas visitors, their taxation basis and rates were set to ensure that they can be internationally competitive.
Subsequently, the clubs have therefore asked that the government reduce their tax burden, including taxing them based on gross gaming revenue, like the casinos. Unlike actual gross turnover, gross gaming revenue refers to the earnings net of winnings paid out. Such a basis, the clubs have said, would allow them greater flexibility to adjust payout ratios.
However, the government has decided to continue its plans to tax non-casino gaming activities in Singapore, such as 4D and Toto, based on actual gross turnover. Lim said that otherwise the government could, unwittingly, incentivize operators to raise payouts and thereby increase overall gaming demand. In addition, international competitiveness is not a consideration for fruit machines operated by the clubs.
However, as a concession to the clubs, she confirmed that it has been decided to lower the private lottery duty for fruit machines to 9.5% of actual gross turnover, instead of the 12% planned earlier. This reduced tax rate of 9.5% takes into account both the data and feedback from all the clubs, as well as the change in Singapore’s gaming landscape.
The government will, thereby, forego SGD25m (USD19.5m), or about 8%, of the private lotteries tax collection. The majority of the clubs will pay less tax than they are currently paying.
However, Lim stressed that it is not the role of the government to offset the loss of market share that the clubs may face with the opening of the casinos. They will, she concluded, need to adapt to the change in the gaming landscape and devise appropriate strategies to generate future revenues.
Singapore Lowers Fruit Machines Duty
by Mary Swire, Tax-News.com, Hong Kong
Tuesday, February 15, 2011
During a second reading of the Private Lotteries Bill 2011 in parliament, Singapore’s Second Minister for Finance and Transport, Lim Hwee Hua, announced that the government will lower the private lottery duty for fruit machines to 9.5% of actual gross turnover, instead of the 12% planned earlier.
She said that, in his 2006 budget statement, the Minister for Finance had announced a change in the taxation basis and tax rate for fruit machines. Specifically, he announced a private lottery duty at 12% of actual gross turnover of fruit machines, rather than 30% of deemed turnover. The 12% rate was then set so as to be revenue-neutral to the government.
It was considered that the technology of fruit machines has evolved, so that the government could make the shift in taxation basis from deemed turnover to actual gross turnover. However, the implementation of this new tax treatment was subsequently deferred to receive further feedback from the clubs.
Lim noted that, since the opening of the casinos in the integrated resorts (such as Marina Bay Sands and Resorts World Sentosa), the gaming landscape has changed and clubs have seen a decrease in fruit machine revenue. The casinos are taxed on their gross gaming revenue, which is the basis of taxation adopted for casinos in other major jurisdictions. In addition, given that the casinos are targeted mainly at overseas visitors, their taxation basis and rates were set to ensure that they can be internationally competitive.
Subsequently, the clubs have therefore asked that the government reduce their tax burden, including taxing them based on gross gaming revenue, like the casinos. Unlike actual gross turnover, gross gaming revenue refers to the earnings net of winnings paid out. Such a basis, the clubs have said, would allow them greater flexibility to adjust payout ratios.
However, the government has decided to continue its plans to tax non-casino gaming activities in Singapore, such as 4D and Toto, based on actual gross turnover. Lim said that otherwise the government could, unwittingly, incentivize operators to raise payouts and thereby increase overall gaming demand. In addition, international competitiveness is not a consideration for fruit machines operated by the clubs.
However, as a concession to the clubs, she confirmed that it has been decided to lower the private lottery duty for fruit machines to 9.5% of actual gross turnover, instead of the 12% planned earlier. This reduced tax rate of 9.5% takes into account both the data and feedback from all the clubs, as well as the change in Singapore’s gaming landscape.
The government will, thereby, forego SGD25m (USD19.5m), or about 8%, of the private lotteries tax collection. The majority of the clubs will pay less tax than they are currently paying.
However, Lim stressed that it is not the role of the government to offset the loss of market share that the clubs may face with the opening of the casinos. They will, she concluded, need to adapt to the change in the gaming landscape and devise appropriate strategies to generate future revenues.
