With the exception of services related to telecommunications and laundry, hotel operators have to pay tourism tax on all ‘complementary services’, which are the services provided by hotels not related to accommodation or food. This was the interpretation of the Court of Second Instance, a finding that will cost Galaxy Entertainment MOP2.57 million (US$320,488) in tourism tax. In 2011, Galaxy Entertainment decided not to pay tourism tax on the sales of ferry, air shuttle and flight tickets, paid parking space, transportation, rental of equipment, mail services and sale of newspapers provided in the company’s StarWorld Hotel. According to the operator’s interpretation of the law, these ‘complementary services’ to the industry were tax-free. However, in June 2014, Galaxy was notified by the Financial Bureau Services (DSF) to pay MOP2.57 million in taxes regarding the operations of the hotel for 2011. The company complained about the decision to DSF but it was told again that it should pay the amount. Finally, on 28 July 2014 Galaxy paid the taxes. The payment was conditional, as the company was ready to take the case to the local courts. Indirect tax Following two different complaints sent to the Director of DSF and to the Chief Executive, in early 2015 Galaxy took the case to the Court of Second Instance. This week, the government published the decision made by the court in November 2015, which denied the tax exemption and made Galaxy’s payment permanent. According to the Court of Second Instance, the first Article of the law on tourism tax (Law no. 19/96/M) defines that only the complementary services related to telecommunications and laundry are tax-exempt. Another of Galaxy’s arguments was that for some of the services provided there was no income for the company and that the money received was handed to the third parties offering the service. Regarding this point, the local court also clarified that the tax on tourism is an indirect tax and as such it is paid because of the services provided, regardless of the income generated. This means that even if a company is losing money by providing a complementary service, if it is charging for it it will have to pay the tourism tax. Business Daily contacted Galaxy Entertainment to clarify whether the group had appealed the decision. However by the time the story went to press the company had failed to provide a reply.
—
