Review may bring tax base back onshore

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The government is to review the way it taxes companies that offer online gambling to UK consumers from abroad, a move that is likely to raise their tax bills.

The review of taxation of remote gambling was announced by the Treasury yesterday, following quickly on from a proposal last week from the gambling policy minister, John Penrose.

That proposal said gambling should be regulated where it was consumed, not where it was supplied from, a move that analysts predicted would set up the framework for a change in the tax regime.

Justine Greening, the Economic Secretary to the Treasury, said: "I will review the case for changing the taxation regime in line with John Penrose's proposal and taxing operators on the basis of customer location."

To prevent UK operators being taxed twice, she said she would consider the implications of other countries' rules.

Many gaming companies operate from offshore tax havens such as Gibraltar, where the tax rate is 1 per cent, compared with 15 per cent in the UK. Analysts estimate that introducing such a tax could lead to a hit of up to £30m a year to the larger operators. Shares in Betfair fell nearly 5 per cent yesterday, Ladbrokes 3 per cent and William Hill 1 per cent.

William Hill said it would work closely with the Government "to ensure that the review fully takes into account the commercial impact of any change before any decisions are made".