The Malaysian government will impose a 20% tax on Genting Malaysia’s VIP operations from January 2019, according to a research paper from UOB KayHian Research. The hike was proposed earlier this month and reports of the amount ranged from 10% to 35%, but UOB KayHian conducted channel checks and finalized their prediction at 20%. This is double the 10% estimated by Genting themselves, but the prediction is nevertheless likely to have a positive impact on a share price that was damaged when the probable tax increase was revealed earlier in the month.

License and Tax Rise

The forthcoming increase was first suggested in early October by Malaysian Finance Minister Lim Guan Eng, who said the 2019 budget would contain details of the first change to gaming tax rates since 1998. Eng announced Thursday that the annual license fee for Malaysian casinos would rise from $28.8 million to $36 million and the tax on gross gaming income would jump from 25% to 35%, but did not give firm figures on the Genting VIP tax.

Genting had initially stated that it would be “assessing the full implications” of the additional fees and that it would take “the appropriate next course of action”. This includes the potential reworking of its cost structure in order to mitigate the impact of the tax increases.

Not a Problem for Genting

Analysis firms Maybank Kim Eng Research and Nomura International last month said that the projected increases would not seriously impact Genting Malaysia. Given the company’s financial condition and prospects, the belief is that any drop in share price would likely be temporary.

Resorts World Genting is expected to open two theme parks, 20th Century Fox World and Skytropolis, during the first six months of 2019, and recently added some new attractions and facilities to boost its capacity.