Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I am glad that Deputy Michael McGrath tabled his amendment. We seek a report within three months on the VAT treatment of bookmakers, remote bookmakers and remote intermediate bookmakers. This arises from a legacy issue and I have been trying to deal with it for over a year. I am frustrated by the responses I have received. Bookmakers are exempt from VAT if they pay betting duty and this is acceptable - nobody is suggesting they should also pay VAT. However, remote bookies and intermediates have not been paying betting duty and therefore are liable for VAT. A different set of rules says that if a company is not established in Ireland but is based in the EU it is exempt from VAT so this rules out a number of bookmaker intermediates. Some of these companies are operating from Gibraltar and, for the purposes of the EU VAT directive, that is not deemed part of the EU.

It is clear these intermediates are providing a service to which VAT should apply but the question is whether they are exempt. They would be exempt if they paid betting duty but they do not. They could also be exempt if they were established outside the State and within the EU but Gibraltar is not deemed part of the EU for VAT purposes. It seems they should, therefore, be liable for VAT in Ireland for services provided here. This is a serious matter because intermediates have been allowed to operate in the State without licence, without paying betting duty and without paying VAT on services provided.

It is estimated the annual turnover from offshore online and telephone gambling in Ireland is €1.7 billion per annum and it would be interesting to see how much of this went to companies established in Gibraltar. From my understanding, such companies should pay VAT in Ireland for the reasons I have outlined. I am deeply frustrated by this but want the Minister of State to correct me, if possible, with specific details. This matter has been teased out through parliamentary questions for some time and it has not been resolved.

Section 34 (1) of the Value-Added Tax Consolidation Act 2010 says the supply of electronic services is provided by remote or intermediate bookmakers. The Act says that when the supply of electronic services is to a non-taxable person in the State, in this case the punter, by taxable persons whose business is outside the European Community, in this case offshore operators, the VAT arises in Ireland. I have serious concerns that intermediates established in Gibraltar that provide electronically supplied services to non-taxable persons in this State are not paying the VAT for which they are liable. This has been going on for years and the relevant turnover is €1.7 billion per annum. Not all of this €1.7 billion is liable for VAT because some of it relates to companies established in jurisdictions that are VAT-exempt under EU rules but Gibraltar is not such a jurisdiction. I seek a report on this or an investigation because this matter requires something more than a paragraph or two in reply to a parliamentary question. We will be dealing with this for years if it is not addressed properly.

This is a genuine attempt to see whether the laws have not been applied in the right fashion. At yesterday's meeting of the finance committee, I raised the issue of a housing association which provides security alarms for elderly vulnerable people in their homes. If one presses the alarm, somebody answers the phone 24 hours a day, seven days a week. It has written to all of its customers in the Twenty-six Counties to state it thought it was exempt from VAT for the services it supplies but has been told by Revenue it is not and from now on it must charge an extra 23% on the cost of the service. This service is provided to very vulnerable, mostly elderly, people living in rural communities. I have been contacted by some of them stating they cannot believe it is happening. Their telephone allowance was cut and now they face a 23% increase in the cost of this service because of VAT.

My point is this happens all the time. Revenue carries out an inspection and states a 23% VAT rate should have been applied to a service and that this must be rectified. It is estimated the offshore turnover of remote intermediate betting is €1.7 billion per annum. At least it should be given the same treatment as elderly vulnerable people in remote areas, and we should ensure they have personal intruder alarms. We should investigate whether those involved in remote intermediate betting were liable to pay the VAT rate at the time and furnish a report which spells out in black and white that they were. We should examine all of the legislation I have quoted. This is my best estimation from reading the various Acts. We know this intertwines with European directives and our national laws on taxation. It is a complex area, but I am not satisfied that they were excluded from VAT in the first place.

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