Cabinet gives green card to Packer; tax jackpot
Australian casino tycoon James Packer has moved one step closer towards opening his inte- grated resort in Colombo, with the Cabinet endorsing a series of tax exemptions for the project.
It now remains for Par- liament to approve the project for it to go into operation. In the unlikely event that Parliament rejects the project, it will be deemed to be rescinded under the provisions of the Strategic Development Projects Act.
On Monday, a gazette notification granting approval for Lake Leisure Holdings (Pvt) Ltd. to build the integrated resort at D.R. Wijewardene Mawatha was issued. It is the penultimate step defined in the Strategic Development Projects Act. The proposal must go before Parliament within three months.
It stated that the Cabinet of Ministers had approved the project and confirmed a range of tax concessions on gaming and non-gaming activities. This includes the hotly debated, 10-year exemption from corporate income tax.
Additionally, dividends paid to shareholders will be exempted from income tax for 11 years; the company will be conditionally exempted from paying withholding tax on management fees, royalty payments and marketing fees; and it will be excused from payment of withholding tax on interest on foreign loans taken for capital expenditure and technical fees, management fees, royalty fees and marketing fees.
A maximum of 30 expatri- ate staff will be exempted from the Pay as You Earn (PAYE) tax for five years. There is a 48-month Value Added Tax (VAT) exemption on the importation and local purchase of project-related goods. This concession is also applicable to supplies made by sub-contractors to a contractor for supplies to the company.
However, the VAT is payable by the company when it starts commercial operations. The company is also fully exempted from the payment and charge of the Port and Airport Development Levy on all items imported for project implementation. The contractor or contractors are exempted from the Construction Industry Guarantee Fund Levy. There are also concessions granted in terms of customs duty.
It was revealed earlier this month that Mr. Packer and his local partner, Rank Holdings, were redesigning the architectural plan of their integrated resort following objections by the Urban Development Authority.
The vast tax exemptions for Lake Leisure Holdings come amid media reports of casinos rapidly spreading across Asia. The Philippines capital of Manila is set to welcome four big casinos.
One of them, Solaire -- operated by the Philippineowned Bloomberry Resorts and Hotels -- will cost more than US$1 billion to finish. It is a far cry from Mr. Packer’s US$ 350,000 project in Sri Lanka.
Meanwhile, the Cabinet has also approved the construction of an integrated resort by a John Keells joint venture. ‘Iconic’ will consist of multiple businesses including a luxury hotel, convention centre, entertainment and gaming facilities, shopping mall, luxury condominiums, service apartments and office space. It will be located at Glennie Street and Justice Akbar Mawatha, Colombo 2.
This project will also benefit from a 10-year corporate income tax exemption but only on profit and income generated from non-gaming activities. It will pay corporate income tax on its casino revenues. Where other tax concessions are concerned, benefits similar to those afforded to Lake Leisure Holdings apply.