South Korea's Foreigner-Only Casinos Confront Levy Increase Proposal

The Korea Casino Association has issued a direct warning about a government proposal to raise the mandatory tourism levy from 10 percent to 15 percent of revenue for foreigner-only casino operators across South Korea, and the group states this change would accelerate bankruptcies among operators still working through post-COVID recovery challenges.

According to the association's statement, casinos operate under a unique tax structure where the levy applies directly to revenue even during periods of losses, a system that differs sharply from other industries taxed primarily on profits, and this distinction forms a core part of the organization's critique of the proposed adjustment.

Details of the Proposed Changes

The proposal includes not only the levy increase but also modifications to licensing terms, notably shortening renewal periods to five years, and the association argues these combined elements would reduce competitiveness against regional rivals in markets such as Macau, Singapore, and the Philippines where operators face different fiscal and regulatory conditions.

Observers note that South Korea's foreigner-only casinos have relied on steady revenue streams to rebuild visitor numbers and stabilize finances since the pandemic disruptions of 2020 through 2022, and data from industry reports indicate many facilities continue to operate below pre-pandemic capacity levels in certain regions.

Revenue-Based Levy Structure Explained

Casino operators in this sector pay the tourism levy as a percentage of gross revenue regardless of overall profitability, which means even loss-making properties must remit the full amount each period, and the Korea Casino Association highlights this mechanism as placing an outsized burden compared to standard corporate taxation models applied elsewhere in the economy.

Those who've examined the current framework point out that the existing 10 percent rate already represents a significant fixed cost, and an increase to 15 percent would compound pressures during times when international tourism flows remain variable due to economic conditions in key source markets like China and Japan.

License Renewal and Regional Competition

The association further criticizes the move toward five-year license renewals, stating that shorter cycles create planning uncertainty for long-term investments in facilities, marketing, and staff training, and such instability contrasts with more extended licensing arrangements available to competitors in neighboring jurisdictions.

Regional rivals often operate under frameworks that allow greater flexibility in revenue allocation during recovery phases, and the Korea Casino Association warns that without adjustments to the proposed South Korean measures, operators risk losing market share as high-roller adn leisure visitors shift preferences toward more stable environments elsewhere in Asia.

Recovery Context Since COVID-19

Many South Korean foreigner-only casinos began gradual reopenings in 2022 and 2023 with strict health protocols, and visitor numbers have shown incremental gains tied to eased travel restrictions, yet full restoration of pre-pandemic revenue levels has proven slower than anticipated in several properties.

The association's statement references ongoing efforts to attract new customer segments while managing elevated operational costs, and any additional levy would divert funds that might otherwise support these initiatives or cover existing debt obligations accumulated during closure periods.

Industry Response and Broader Implications

Representatives from the Korea Casino Association have called for reconsideration of both the levy hike and the licensing changes, emphasizing that the current structure already differentiates casinos from profit-based taxation in other sectors, and they urge policymakers to evaluate how these adjustments align with goals of sustaining tourism-related employment and foreign exchange earnings.

Stakeholders in the sector continue to monitor developments around the proposal, which surfaced publicly in July 2026, and further discussions are expected between government officials and industry groups before any final decisions take effect.

Conclusion

The Korea Casino Association's warning outlines specific risks tied to the tourism levy increase and shorter license terms, framing these as factors that could undermine the financial recovery of South Korea's foreigner-only casino operators while affecting their position relative to regional competitors. The statement underscores the revenue-based levy model as a distinguishing feature that amplifies the impact of percentage increases even during unprofitable periods.