Packer's Crown resort casino in Sri Lanka faces delays after tax changes

2013-10-24

Reading time 1:32 min

(Sri Lanka).- Opposition by Buddhist religious leaders and some political parties in Sri Lanka led the government to announce on Tuesday that it will alter tax concessions granted to Australian gambling tycoon James Packer's Crown for a us$ 400 million hotel resort that is set to include a casino.

The changes could take at least one month and will likely delay Packer's mixed-development investment project for the second time this year.

Lakshman Yapa Abeywardena, Investment Promotion minister, said the decision to alter the deal's terms came after various opposition politicians said Packer was getting concessions not given to local entrepreneurs and Buddhist leaders said the casino could be detrimental to Sri Lanka's culture.

"We'll amend the bill and have new terms by November 21”, Abeywardena told reporters. "We will describe how we are going to grant tax concessions, like if it is from the gross revenue or net revenue. We will base the tax on the gross revenue and not on the net profit. The tax concession is on investment and not on the hotel operation. We will clarify all these in the new gazette."

The ministry over the weekend released photos of Packer meeting officials in Sri Lanka, and Abeywardena has said that he requested Packer to invest more in the country. “He said he was willing to bring more investments. He told us he will consider some more investments [along with this one], but we have clearly told him we would not allow investments for more casinos," the minister added.

Crown last week confirmed that it was in detailed discussions with the Sri Lankan government and potential joint venture partners regarding the development of a 5-star integrated resort with a total project cost of approximately us$ 400 million.

The deal has already been delayed once after the government asked Lake Leisure Holdings, the joint venture between Crown and its local partner, Rank Entertainment Holdings, to change its construction plans.

Packer's deal has already been approved by the island nation's cabinet and is expected to easily win approval from the parliament because President Mahinda Rajapaksa's ruling coalition has more than a two-thirds majority.

Packer, one of Australia's richest men, has been in talks since February with the government over hotel and entertainment investment options as he expands his global gambling business that includes casinos in Australia, Macau, Britain and the United States.