Gambling companies who operate offshore are to be hit with a £300 million tax bill under plans unveiled today.
The Treasury will force bookmakers to be taxed on their profits from British customers, wherever the companies are based in the world.
And those who try to dodge tax will face up to seven years in jail and unlimited fines.
High street bookies like William Hill, Ladbrokes and Corals have all located the online parts of their business offshore in tax havens like Gibraltar in order to reduce costs.
But from next year betting firms who take money from punters in the UK, online or on the telephone, will be liable to pay gambling taxes on the profits from those customers even if they are based overseas.
Depending on the type of gambling offered, remote gambling operators with UK customers will be liable to pay either remote gaming duty, general betting duty or pool betting duty, all of which are currently taxed at 15 per cent.
The Gambling Commission estimates that the UK remote gambling market is worth over £2bn per year. Treasury officials calculate that the new rules will bring in approximately £300m per year in additional tax revenues.
The new rules will be supported by tough enforcement measures, including the creation of new criminal offences.
Failure to comply with them could result in prison sentences of up to seven years, unlimited fines, or the loss of a remote gambling operator’s licence to operate.
The changes, which are due to come into force on 1 December 2014, will be included in the Government’s next Finance Bill.
The new rules have been drawn up following a three month consultation on plans to change move to taxing gambling on a ‘place of consumption’, rather than on a ‘place of supply’ basis.
Government officials say that requiring all online operators which work or advertise in the UK to have a British licence will ensure they participate in tackling corruption in sports, provide funding to combat problem gambling and ensure adequate protection of children and vulnerable adults.
Sajid Javid, Economic Secretary to the Treasury, told the Mail: ‘It is unacceptable that gambling companies can avoid UK taxes by moving offshore, and the Government is taking decisive action to ensure this can no longer happen in the future.
‘These reforms will ensure that remote gambling operators who have UK customers make a fair contribution to the public finances.’
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