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Last Updated: Saturday, 2 July, 2005, 10:05 GMT 11:05 UK
HMV moves web business to island
One of the UK's largest music, video and DVD retailers HMV has announced it plans to move its internet mail-order operation to Guernsey.

The company is the latest to take advantage of a tax loophole which means it can sell products by mail-order without VAT.

It hopes to have the warehouse up and running by Christmas, and also plans to open a store in the spring.

Spokesman Gennaro Castaldo said it was good news for the island.

'Important support'

He said: "There are a number of other operators, large supermarkets for example, who have been based there for quite some time.

"We resisted that for as long as we could but we realised that if we were to try to compete on the same level playing field then we would have to try to get the benefit and that advantage as well

"That is only one aspect of it, the support businesses get in Guernsey is equally important."

Under European law, retailers that operate outside the EU can sell products valued at less than 18 to customers in member states without charging VAT.

During a parliamentary debate in February it was stated that the Treasury is currently losing 80m a year from retailers operating "offshore" and that could soon reach 200m a year.

Last week Jersey's government said it may close the loophole.

Senator Frank Walker, president of the island's policy committee, said the loophole was unwelcome and damaging.

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