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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Packer’s Bumper Package From Govt

Packer’s Bumper Package From Govt

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1Packer’s Bumper Package From Govt Empty Tax holiday for Packer Sun Jun 02, 2013 12:03 pm

sriranga

sriranga
Co-Admin
The Ministry of Finance and Planning has recommended a 10-year income tax holiday and thereafter a scandalous tax concession of lower six per cent of standard 50 per cent of the prevailing tax rate of the hotel industry for further 12 years for the Australian Casino magnate, James Packer, who has approached the Board of Investment (BoI) to set up a major casino complex in Colombo, Ceylon Today can reveal.

Documents obtained by this newspaper reveal that K.M.M. Siriwardana, Director General of the Ministry of Finance and Planning has recommended the Board of Investment, that Packer and his M/S Crown Ltd and the local collaborator, M/S Rank Entertainment Holdings (Pvt) Ltd shall also be charged only five per cent of gross collection under the Betting and Gaming Levy and that the dividends distributed
to the shareholders... ...out of the exempted profit would also be exempted from the income tax during the said tax holiday of 10 years and one year thereafter.

Among other concessions, the all project related items of capital nature and any other project related items as approved by the BOI would also be exempted from Custom Duty.

In addition, the importation of project related goods and the local purchases of project related goods during the project implementation period of 48 months will also be exempted from Value Added Tax (VAT).

The project company will also be exempted from the payment of Port and Airport Development Levy during the first 48 months. The contractors and the project company shall also be exempted from the construction Industry Guarantee Fund Levy and the company will be exempted from the payment of Withholding Tax on interest on foreign loans.

The proposed casino complex, described as an integrated resort by the Finance Ministry is expected to have a minimum of 400 hotel rooms.
The estimated cost for the project is US$ 350 million and it is expected to generate 2,600 jobs.
Packer, whose gambling empire stretches from Australia to the UK, recently visited Sri Lanka to finalize the agreement with the BOI.
http://ceylontoday.lk/27-33869-news-detail-tax-holiday-for-packer.html

http://sharemarket-srilanka.blogspot.co.uk/

2Packer’s Bumper Package From Govt Empty Packer’s Bumper Package From Govt Sun Jun 09, 2013 2:35 am

sriranga

sriranga
Co-Admin
By Mandana Ismail Abeywickrema
* Massive tax concessions for gaming business in Colombo

* Packer to set up gaming centre near Buddhist temple


Australian gaming tycoon James Packer’s entry to Sri Lanka has created a controversy following the government’s move to accept the setting up of a integrated resort with gaming activities as a strategic investment project which is being offered many tax concessions.

The government’s move to grant these tax exemptions to Packer’s resort and gaming project in Colombo at a time when the masses are slapped with numerous price hikes due to increased taxes does not augur well for the argument that the state is committed to ‘providing relief’ to the people.

The JVP that raised the issues in Parliament noted that the double standards of the government that has given precedence to protecting the country’s Sinhala Buddhist identity has now been revealed with the many tax concessions given to Packer being made public.

The government last week made various claims over the project and Investment Promotion Minister Lakshman Yapa Abeywardena said that the government has only approved a mixed development project proposed by Packer and that a casino license has not been given to the project.

However, the Minister told The Sunday Leader that a casino license that has already been issued to a company could be transferred to Packer’s project if necessary.

When asked if a casino or a gaming centre could be allowed in close proximity to a Buddhist temple, Abeywardena noted that the government would not allow any casino near a religious institution.
Packer’s project is to be set up in the area opposite Lake House on D.R. Wijewardena Mawatha in close proximity to the Sri Sambuddhaloka Vihara in Fort.

Governing party ally, the JHU has spoken against the government’s move to promote casinos and gaming centres in the country to promote Sri Lanka as a tourist destination. However, it has so far remained tight lipped over Packer’s deal with the government.

According to Abeywardena, Packer’s project in Colombo does not involve any casino activities.
Be that as it may, a letter sent by the Fiscal Policy Department of the Finance Ministry to the Board of Investment on May 29, 2013 is titled, “Project to set up an integrated resort with a minimum of 400 hotel rooms with gaming activities at D.R. Wijewardene Mawatha, Colombo.”

The letter states that Packer’s “mixed development project” would be granted tax holidays as it could be considered the project under the Strategic Development Projects Act No. 14 of 2008.

The project has been identified as a strategic development project since the total cost of the project – US$ 350 million – should be made within a period of 36 months, out of which US$ 325 million should be made in fixed assets being land, buildings, construction and fittings of the building and associated equipment.

Director General, Finance and Planning Ministry, K. M. M. Siriwardhana has informed Chairman of the Board of Investments that the whole project would be exempted of corporate income tax for a period of 10 years and on the expiry of the tax exemption period, the profits and income of the company shall be charged at the rate of the lower of six per centum of 50 percent of the prevailing tax for the hotel industry for a period of 12 years.

Also, the betting and gaming levy would be 5 percent of the gross collections and would exclude cost of incentives/discounts and associated costs including taxes in attracting customers.

The project would be exempted from dividend tax for ‘ten years and one year after.’ It will also be exempted from customs duty of project related items, value added tax, Port and Airport Development Levy (PAL) and many other exemptions.

According to the Finance Ministry note, the foreign investors of the Project are M/s Crown Ltd ‘Crown Towers,’ 8 Whiteman St. Southbank 3006, Victoria, Australia and M/s Allinga Pvt. Ltd of No. 26-03, Centennial Towers, Singapore 039190.

The foreign shareholders will hold 55 percent of the equity in the company and 45 percent of the equity in the company will be owned by the local collaborator, M/s Rank Entertainment Holdings (Pvt) Ltd. of 282/1, 4 Floor, CBS Building, Galle Road, Colombo 3. The project will be funded by a combination of offshore debt and equity.

Packer’s project came into the limelight last week when the JVP posed a question to the government in Parliament whether it has identified casino businesses as strategic development projects in the country.
JVP Parliamentary group leader Anura Kumara Dissanayake made the query in a special statement in Parliament.

Speaking of the large scale tax relief offered to Packer, Dissanayake asked whether the government provided the lands to set up Packer’s casino complex and why the project has been offered so many tax holidays.

He pointed out that providing tax relief to a massive casino project over and above the existing regulations has caused a controversy.

Citing Siriwardhana’s letter to the Chairman of the Board of Investment, Dissanayake said the letter states that a meeting between the Finance Ministry Secretary and Packer’s representatives has resulted in the large-scale casino project being identified as a strategic development project.

According to the JVP MP, it is evident that the government is now engaged in providing relief to casinos and gaming centres.

Packer has agreed to invest US$350 million to build a 36-story skyscraper which will be known as Crown Colombo in the heart of Colombo for a casino and gaming enterprise to be opened in 2016.

Investment Promotion Minister Abeywardena said Packer’s investment is identified as a mixed development project and that the initial tax exemption of 15 years has now been reduced to 12 years.

He observed that the project would also generate 2,600 direct employment opportunities and numerous other indirect employment opportunities.

Explaining the development project, Abeywardena said there was no discussion of a casino and that there would be a star grade resort with a minimum of 400 rooms.

“It will have facilities for retail shopping, entertainment, fine dining restaurants and meeting and convention facilities,” the Minister said.He added that casino businesses have not been identified as strategic development projects in the country.

Nevertheless, the Minister seems to have missed the fact that the Finance Ministry has accepted Packer’s project for a resort with gaming and that the government has accepted casinos and gaming activities as strategic development projects by offering tax concessions.

List of Concessions offered to Packer
1. Exemption of 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.

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%) of 50% 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.

2. 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% of the gross collections (being the amounts collected from customers), excluding the customized cost of incentives/discounts and associated costs including taxes, if attracting the customers.

3. 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.

4. 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.

5. Exemption of Value Added Tax (VAT)
The payment of Value Added Tax (VAT) on the importation of project related goods and the local purchases of project related goods during the project implementation period of 48 months will be exempted from charge and payment of VAT. The VAT exemption shall be applicable not only for direct supplies to the Company/Project but also supplies made by a sub contractor to a contractor for supplies to the Company/Project as described and permitted in the VAT Act.

The company shall be liable for the payment of VAT on value of supply as defined in the VAT Act No. 14 of 2002 on the commencement of commercial operations.

6. Exemption of Port and Airport Development Levy (PAL)
The project company will be exempted from the payment and charge of Port and Airport Development Levy (Pal) and is fully exempted on all items imported for implementing the project (whether directly imported by the Company or sourced through contractors) as described and permitted in the Pal Act during the project implementation period of 48 months, subjected to the same conditions referred to in Item 4 above.

7. Exemption of Construction Industry Guarantee Fund Levy
The contractor/s of the project company shall be exempted from Construction Industry Guarantee Found Levy imposed under the Finance Act No. 5 of 2005 in relation to the project.

8. Exemption of Withholding Tax
The company will be exempted from the payment of Withholding Tax on interest on foreign loans taken for capital expenditure and technical fees, management fees, royalty fees and marketing fees.

The company will be exempted from the payment of Withholding Tax on management fees, royalty payments and marketing fees provided the fees are at three per centum (3%) of gross operating revenues by way of basic management fees/royalties, marketing fees at one point five per centum (1.5%) of gross operating revenue and up to 10 per centum (10%) of gross operating profits by way of incentive management fees.

9. Exemption of PAYE Tax
The expatriate staff of the project company will be exempted from payment of Pay As You Earn Tax (PAYE) subject to a restriction that this concession shall be subject to the maximum number of 60 employees. This concession is applicable for a period of five years. The project company is required to replace expatriate staff with local employees on a best effort basis.

10. Exemptions from Exchange Control Regulations
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.
The project company is entitled to open and operate a Foreign Currency Banking Unit (FCBU) in any commercial Bank of Sri Lanka for the purpose of the project.

http://www.thesundayleader.lk/2013/06/09/packers-bumper-package-from-govt/

http://sharemarket-srilanka.blogspot.co.uk/

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