Japan Confirms Plan to Scrap Tax on Casino Winnings

Japan has decided not to tax the winnings of non-resident foreigners at the country’s future casinos in hopes to attract more overseas gamblers.

The chairman of the ruling Liberal Democratic Party’s Research Commission on the Tax System, Akira Amari, signaled earlier this week that nixing the so-called withhold tax on casino winnings was under consideration by lawmakers.

Japan Mulls Nixing Tax on Foreigners’ Casino Winnings

The move was confirmed earlier today by Mr. Amari. He said that Japan’s central government feared the implementation of the withhold tax would scare away overseas gamblers when the nation’s first Macau-style casino resorts finally open doors.

Mr. Amari further elaborated that “it would be meaningless if no one comes to the integrated resorts after building them” and that Japan’s casinos must be “on a par with international standards.”

Japan legalized casino gambling in late 2016. Under the nation’s gambling statutes, casinos can only operate as a part of larger integrated resorts that also incorporate large hotels, meeting and conference facilities, and retail space, among other amenities.

Japan’s central government plans to issue up to three licenses for three casino resorts in different parts of the country.

The legalization of casino gaming in a bid for more foreign tourists to be attracted was supported by Japan’s former Prime Minister Shinzo Abe and by his successor Yoshihide Suga. Mr. Suga served as Mr. Abe’s Chief Cabinet Secretary for a long time before his rise as the country’s top official this past September.

No-Tax Policy to Be Included in Tax Reform Package

The plan to nix the previously proposed tax on casino winnings will be tacked onto a tax reform package for fiscal 2021. The package is set to be compiled and presented 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 races. Japanese residents’ winnings will be taxed based on the winnings they declare, Mr. Amari explained.

The withhold tax on winnings by non-resident foreigners was first proposed in December 2019. Under that plan, Japan would have levied a tax on the difference between the value of the chips purchased by overseas gamblers and the amount of chips they convert back into cash. Japanese lawmakers said last year that a tax system of this kind would facilitate any tax probes and investigations that could occur in future.

Japan’s central government will begin accepting casino license applications on October 1, 2021. The license application window was originally scheduled to be opened on January 4, 2021 and be closed on July 30 that year, but the Covid-19 pandemic forced lawmakers to push back the original timeline by nine months. License applications will now be taken until April 28, 2022.

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