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

Packer's Crown resort-casino in Sri Lanka faces delay after tax changes
James Packer, co-chairman of Melco Crown Entertainment Ltd. and chairman of Crown Ltd

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

The changes could take at least one month and likely will 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 Nov. 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 Packer meeting officials in Sri Lanka and Abeywardena said he had asked 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 investment, 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 and the total project cost would be approximately $400 million.

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

Packer's deal has been already 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.

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