The Macao SAR Government has told a junket lobby group that it will not abolish a 5% tax charged on commissions earned by junket operators.

Confirmation of the governments intention to impose the 5% tax comes after the Macau Association of Gaming and Entertainment Promoters sent a letter to the government on 6 February requesting its abolition.

As previously reported by IAG, junkets have long been required to pay tax on the commissions they receive on rolling chip turnover, although this tax has previously been waived.

However, with the passing Macaus new junket law, titled Legal Framework for Operating Games of Chance in Casinos, the government is now demanding payment of the tax.

In response to the lobby groups letter, the government this week replied, Under the Gaming Law, there is no legal basis to exclude a portion of gaming junkets income from the tax because of the cost of the gaming junkets.

In other words, according to the relevant provisions of the existing gaming law, the tax on gaming junkets commission should be calculated at 5% of the gaming junkets commission paid by the licensee.

In an interview with IAG in March, the President of the Macau Association of Gaming and Entertainment Promoters, U Io Hung, argued that a 5% commission tax would have a significant impact on the operation of junkets, who are no longer permitted to engage in revenue share agreements with concessionaires.

He also pointed out that junkets are facing competition from the move by concessionaires towards a direct VIP model, which allows them to provide greater incentives to customers because they no longer have to pay junket commissions.

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Macau government says 5% tax on junket commissions here to stay - Inside Asian Gaming