Reports Suggest Gaming Tax Hike In Russia Being Mulled Over

An amendment planning to hike gaming taxes in Russia has the potential to double the taxes being paid on gaming machines and tables by the country’s largest casino Tigre de Cristal.

According to Grant Govertsen, an analyst with brokerage Union Gaming Securities Ltd, in the event that the legislation is cleared, the casino would see the taxes paid by it go from the current HKD10 million ($1.29 million) to nearly HKD20 million on an yearly basis. This translates to an impact of around 2 percent on earnings before interest, taxation, depreciation and amortization (EBITDA ).

Located within the Primorye IEZ gaming area, the Tigre de Cristal casino is owned by Summit Holdings, a gaming company based in Hong Kong and owned by casino moghul Lawrence Ho. Russia doesn’t have a formal tax structure as fixed amounts are set per operational gaming machine or table.

A recent stock exchange filing by Summit confirmed that the taxation amount in the Russian Federation was a fixed monthly fee that was based on the number of gaming tables and slots in a Russian casino. It said the monthly fees per table and per slot machine were fixed at RUB125,000 (US$2,107) and RUB7,500 respectively. This is said to be an interim estimate and the amount might change in its full year report.

The brokerage firm has however stated that it was not certain if the taxes would be changed in the near future. Govertsen said that the necessary legislative changes hadn’t yet been finalized and since the local policy could be different from the national policy, the government of Vladivostok region where the Primorye zone is situated could set a lower tax rate within the band set by the federal government.

In a statement Govertsen said,

We note that the rates paid in Primorye are already in the middle of the band that might be established at the federal level. In a worst case scenario, the local government in Primorye could double the current tax and be inline with the top-end of the range established at the federal level. We do not believe the local government in Primorye has indicated they will move the taxes in either direction.

The possibility of the Russian government raising taxes has been brought up earlier by Russian media. According to some Russian media outlets, the government could set the tax rate to be within a band of RUB50,000 to RUB250,000 ($840 – $4,202) per month for each gaming table and for each slot machine it could be RUB3,000 to RUB15,000 ($50 – $252).

Adrian Sterne

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