Online DVD and CD seller Play.com has been flogged to Japanese web conglomerate Rakuten for £25m in cash.

The transaction comes months ahead of a government clampdown on the tax loophole that the Channel Islands-based etailer had exploited over the 13 years since it was founded.

This is the third acquisition that internet service firm Rakuten has made in Europe: it bought the French ecommerce player PriceMinister in 2010 and German online shopping mall Tradoria in July.

Hiroshi Mikitani, chairman and CEO of Rakuten, said the UK is "one of the largest and most mature ecommerce markets" and described Play.com as a pioneer in its field.

Market research firm Datamonitor estimates that web sales in the UK will hit $58bn by 2014, with 55 million online users – ie, just about everyone in the UK.

Chancellor George Osborne is to close the Channel Islands tax loophole from next spring: the UK Treasury reckons it loses roughly £130m a year due to Channel Islands-based VAT avoidance. ®