Japan Considers Taxing Foreigners’ Casino Profits

By Ucatchers

Japan’s ruling Liberal Democratic Party (LDP) is ready to implement changes to the nation’s planned integrated complex tax system, the party’s tax research chair Akira Amari said last week.

The changes will be included in the country’s 2021 tax reform to be released in December.

In relation to integrated complexes, the PLD discussed last week how the casino customer earnings in the country when its first gambling establishments open their doors.

Japan legalized casino gambling in December 2016. The country’s central government plans to grant up to three casino licenses to interested Japanese cities and prefectures and their private sector partners. Under Japanese law, casino-style gambling can only take place within multi-use complexes known as integrated complexes.

Reports emerged late last year that Japanese lawmakers were considering introducing a called withholding tax on the earnings of non-resident foreigners who play in future casinos in the country. This type of tax system was considered because it could facilitate future tax inquiries and investigations.

The system consisted of charging a tax on the difference between the value of the tokens purchased by a non-resident foreigner and the amount of tokens converted into cash. Legislators were also understood to have reflected on the obligation for casino operators to keep records on token purchases and profit and loss results.

Income tax could be eliminated

Mr Amari told reporters last week that the PLD plans to introduce changes to the system related to the taxes of the integrated complexes and their casino facilities and that all problems must be solved because casino operators could backtrack on their plans to bid for the right to run gambling establishments in Japan.

Mr. Amari said that we legislators did not decide on “a tax system”, things would be “Completely unpredictable” and no operator would want to be involved.

Japan’s Ministry of Land, Infrastructure, Transportation and Tourism has requested that the 2021 tax reform Eliminate the need to withhold taxes on the winnings of foreign casino customers and you have asked that these earnings be reported on a tax return as temporary income.

Mr. Amari said there would be discussions to ensure that foreign players’ winnings are exempt from tax, as taxing them would be a deterrent to customers and would put an unnecessary burden on casino operators.

The central government of Japan originally planned to start accepting license applications from cities / prefectures and their private sector partners from January 4 to July 30, 2021. However, the Covid-19 pandemic and the disruptions it caused in almost every aspect of life caused that timeline to be delayed by nine months.

Under the new schedule, applications will be accepted between October 1, 2021 and April 28, 2022. The government of the country also has to complete its Basic Policy of Integrated Complexes, a framework in which the establishments will be regulated.

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