Japan’s would-be casino operators got a major shock this week on reports that the government will impose a gaming revenue tax that tops out at a whopping 50%.

On Tuesday, Japan’s Jiji news agency reported that the ruling Liberal Democratic Party and its junior coalition partner Komeito plan to include specific tax rates when the Integrated Resorts (IR) Implementation Bill is submitted to the Diet for consideration in the current session.

According to the government sources, the plan is to impose a 30% tax rate on annual revenue up to ¥300b (US$2.8b). The rate is significantly higher than the effective 7.75% Nevada casinos are required to remit, although lower (at least, initially) than the effective 39% rate paid by Macau casinos.

However, should an operator’s annual revenue exceed ¥300b, a 40% tax rate would apply on revenue over ¥300b but less than ¥400b ($3.7b), while revenue exceeding ¥400b but less than ¥500b ($4.7b) could face a hefty 50% rate.