Betfair threatens offshore tax move

One of Britain's leading online betting exchanges, Betfair, is considering relocating its operations from the UK to Malta in anticipation of new tax laws being introduced on its revenues.

Link: Mid-tier gamble may pay out

The Treasury is close to completing a review of the tax treatment of exchanges and their clients. Betfair currently pays about 15% of its gross revenue from commissions to the Treasury but, according to the Guardian, is fearful of a more punitive tax regime, and an offshore location would considerably cut costs.

The company has received a licence to operate in Malta. The move would be relatively simple, as Malta is a member of the EU and there would be no need to restrict its advertising and sponsorship in the UK.

It would also be easy to move and host its computer servers offshore while maintaining a head office in the UK.

In March 2004, chancellor Gordon Brown ordered a review of the tax treatment of betting exchanges and their clients, and this review is now thought to be close to completion.

Traditional bookmakers view as unfair the current system by which exchanges' duty obligations are assessed. They have also said that many betting exchange clients use sites such as Betfair to operate as bookmakers, but without paying the taxes that are normally due.

However, in their defence, betting exchanges say that they are themselves the primary bookmaker, in that they ultimately accept bets placed by the public and ensure that the winners are paid out.