Tamil Nadu, Wonderla in talks to resolve local tax tangle

The Tamil Nadu government and Wonderla Holidays are negotiating to resolve a disagreement over a local tax that is over and above the goods and services tax (GST) regime, which has set back the entry of Bengaluru-based amusement parks operator into Tamil Nadu, said the company.
The state government had wanted to have another tax layer, which the company has been contesting since it would take the total tax component up to 28%, including a GST rate of 18%. The Wonderla project in Tamil Nadu was an investment announced during the Global Investors Meet of 2015.

Officials with Wonderla also said talks have begun with alternative destinations even as they remain hopeful that Tamil Nadu will expedite negotiations to resolve the tax standoff. “The additional tax component is present nowhere else we operate in. It could render the facility with higher ticket prices,” Arun Chittilappally, director technology of Wonderla Holidays and Resorts, told ET. Wonderla operates entertainment parks in Bengaluru, Kochi and Hyderabad, besides operating a resort in Bengaluru. The company has completed land acquisition of 60 acres near Chennai, but the project has not moved beyond the land acquisition stage. The required investment for the project would be about Rs 500 crore, said Chittilappally.

An official with the state government incharge of new investments said internal discussions are going on at the “highest level” regarding the entry of Wonderla into Tamil Nadu. In the September quarter earnings call, on a query on the Chennai park, Wonderla’s joint MD George Joseph had said: “Things are moving according to the information we have. We understand that all the secretaries have agreed on the removal of LBT (local body tax) and the chief minister has also agreed.”

Wonderla had witnessed a flat growth in Hyderabad and a severe impact in its Kerala operations in the aftermath of the recent floods, although its Bengaluru business had shown improvements in the second quarter, which saw a 60% profit after tax drop down to Rs 94 lakh.

Ahead of the second edition of the investor’s meet in January 2019, the state government has been undertaking road shows with prospective investor communities in countries such as China, Taiwan and other nations.