Japan has decided not to tax the winnings of non-resident foreigners in future casinos in the country in hopes of attracting more foreign players.
The chairman of the Commission of Inquiry on the Tax System of the ruling Liberal Democratic Party, Akira Amari, noted earlier this week that lawmakers were considering the possibility of rejecting the so-called withholding tax on casino winnings.
Japan Considers Taxing Foreigners’ Casino Profits
The measure was confirmed today by Mr. Amari. He said Japan’s central government feared that the implementation of withholding tax would scare away foreign players when the country’s first Macau-style casino complexes finally open.
Mr. Amari further explained that “it would not make sense if no one comes to the integrated resorts after they are built” and that Japan’s casinos must be “up to international standards.”
Japan legalized casino gambling at the end of 2016. Under the nation’s gambling statutes, the casinos can only operate as part of larger integrated complexes that also incorporate large hotels, meeting and conference facilities and commercial spaces, among other amenities.
The central government of Japan plans to issue up to three licenses for three casinos in different parts of the country.
The legalization of casino games in an attempt to attract more foreign tourists was supported by the former Prime Minister of Japan, Shinzo Abe, and by his successor, Yoshihide Suga. Mr. Suga served as Abe’s Chief Cabinet Secretary for a long time before his promotion to the country’s top official last September.
A no-tax policy will be included in the tax reform package
The plan to reject the previously proposed tax on casino winnings will be added to a tax reform package for fiscal year 2021. The package must be compiled and submitted by the ruling Liberal Democratic Party and its junior coalition partner by December 10.
Under current arrangements, casino winnings would be taxed in the same way as winning bets on horse racing. The earnings of Japanese residents will be taxed based on the earnings they declare, Amari explained.
The withholding of income tax for non-resident foreigners was first proposed in December 2019. Under that plan, Japan would have applied a tax on the difference between the value of the chips bought by foreign players and the number of chips they convert back into cash. Japanese lawmakers said last year that such a tax system would facilitate any tax probes and investigations that might occur in the future.
Japan’s central government will begin accepting casino license applications on October 1, 2021. The license application window was originally scheduled to open on January 4, 2021 and close on July 30 of that year, but the Covid-19 pandemic forced lawmakers to delay the original deadline by nine months. License applications will now be accepted until April 28, 2022.