Malaysia’s gaming industry is expected to report weaker earnings this year as the country’s first ever Goods and Services Tax comes into effect from April 1st, crimping revenue at a time of weakening consumer sentiment.
The tax has been under consideration by the government for close to a decade and was finally confirmed last October by Prime Minister cum Finance Minister Najib Abdul Razak. The rate was set at six percent.
Berjaya Sports Toto and Magnum -- two numbers forecast operators (NFOs) listed on the Malaysian stock exchange -- are facing the prospect of lower revenue as well as lower margins this year, analysts said.
"The GST will have the dual effect of both forcing gamblers to reduce their bet sizes as well as serving as an additional tax to the operators, cutting earnings by an estimated 10 percent altogether," said Maybank Investment Bank in a report.
Magnum earlier this month gave its own warning that the tax was likely to have a moderating effect on sales. “With the implementation of the Goods and Services Tax on April 1, 2015 and the higher costs of living from the government's ongoing subsidies rationalisation programme, consumer spending is expected to continue to be weak,” it said. “The GST expense based on net gaming supplies – that will be absorbed by the company – will have an impact on our profitability for the coming financial year,” it said.
NFOs pay an 8-percent gaming tax on total ticket sales and an 8-percent pool betting duty on net revenue.
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