JVP raises pertinent questions "on mini gambling empire"



article_image

By Saman Indrajith


 The JVP yesterday demanded to know from the government as to how and why Australian gambling tycoon James Packer had been promised tax exemptions to set up a ‘mini-gambling empire’ in Sri Lanka.


JVP Parliamentary Group Leader Anura Kumara Dissanayake, making a special statement in Parliament, said that a new company being set up, as a part of Crown Company of James Packer, had been given powers to operate with tax relief to launder black money and would become its own mini government within the country.


Dissanayake said there had been media reports recently on Australian casino king and gambling tycoon James Packer visiting Lanka and meeting some powerful persons of the government, but there were no detailed accounts then. Now, some of the details pertaining to those visits and what had transpired during those talks had come to light in a letter sent by the Director General of the Ministry of Finance and Planning to the Chairman, Board of Investment. It has been recommended that the proposed gambling company be exempted from income tax and Packer and his business partners be exempted from income tax payable on the dividends that have been distributed to the shareholders out of the exempted profit.


The letter revealed details pertaining to the tax concessions to be granted to a mega casino complex to be run by a company belonging to James Packer at the D.R. Wijewardene Mawatha, Colombo. According to the letter, foreign shareholders would hold 55 per cent of the equity in the company and 45 per cent of the equity in the company would be owned by the local collaborator by the name Rank Entertainment Holdings (Pvt) Ltd, the MP said.


The letter mentions that the venture should be considered a Strategic Development Project and the following tax exemptions and concessions be granted to it:


Exemption from Corporate Income Tax


For a period of ten (10) years, reckoned from the year of assessment as may be determined by the Board, the provisions of the Inland Revenue Act No. 10 of 2006 relating to the imposition of income tax shall not apply to the profit of the Company to be generated from the activities of the project.


The said tax exemption period will commence from the first year in which the company makes taxable profit or three (03) years after commencement of commercial operations, whichever falls first. Accordingly, the company would be tax free for 13 years.


On the expiry of the tax exemption period, referred above, the profits and income of the company shall be charged at the rate of the lower of six per centum (6 per cent) of 50 per cent of the prevailing tax rate for the hotel industry, for a period of twelve (12) years immediately succeeding the last date of the tax exemption period.


Betting and Gaming Levy


The liability for the betting and gaming activities shall be as per the provisions of the Betting and Gaming Levy Act No. 40 of 1988 (as amended), such that the 5 per cent of the gross collections (being the amounts collected from customers), excluding the customized cost of incentives/discounts and associated costs including taxes, if attracting customers.


Exemption of Dividend Tax


Dividends distributed to the shareholders out of the exempted profit will be exempted from the income tax during the said tax exemption period of Ten (10) years and one year thereafter.


Exemption of Customs Duty on Importation of Project Related Items


Exemption from Customs Duty will be applicable to all project related items of capital nature and any other project related items as approved by the BOI, imported in the name of the Project Company implementing the project.


The  project company will be exempted from the provisions of Part, I, IA, II, III, IV, V and VI of the Exchange Control Act and this exemption will be solely applicable to the approved business activity of the project.


It has suggested that the project would be recognized under the Strategic Development Project Act and the concessions offered would be granted following the approval of the Cabinet of Ministers. The previous letters issued with this regard were thereby withdrawn. It created the doubt that a powerful hand had been involved in granting the tax exemptions and concessions, the MP said.


According to the laws passed recently amending the Betting and Gaming Act, any gambling venture commenced after April 01, would have to pay a Rs. 100 million tax. But according to the content of the letter, the James Packer venture would be exempted from paying this tax too, Dissanayake said.


MP Dissanayake demanded to know whether the Casino business has been recognized as a Strategic Development Project, whether the lands for this venture had been provided by the government and as to why such amount of tax concessions had been granted to the company.


Investments Promotions Deputy Minister Lakshman Yapa Abeywardena, responding to the queries raised by MP Dissanayake, said that no tax concessions have been granted for the casino complex being set up by James Packer in Sri Lanka. He said that casino business had not been recognized as a Strategic Development Project. The land for the said business had not been provided by the Government but the local partner company. The project would have a minimum of 400 hotel rooms, retail shopping, entertainment facilities, fine dining restaurants, meeting and convention facilities. The previous letters had been withdrawn as there had been some discrepancies pertaining to the dates of operation of the venture, he said.


 
 
 
 
 
 
 
 
 
 
animated gif
Processing Request
Please Wait...