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Last Updated: Wednesday, 20 September 2006, 09:43 GMT 10:43 UK
Jersey awaits VAT report findings
CD
Firms avoid VAT by basing CD mail-order operations in Jersey
A report on whether Jersey was right to prevent companies setting up businesses selling VAT-free goods is due to be published in the next fortnight.

Companies can offer items such as CDs and DVDs costing less than 18 by sending them from Jersey.

Some companies doing this have been given until January by the States to change working practices or leave after pressure from the UK government.

A scrutiny panel examining the issue will publish its findings in two weeks.

'Best deal'

Under current tax laws shoppers do not have to pay VAT or import duty on goods brought in from outside the European Union (EU) that cost less than 18.

Larger retailers, such as supermarket giants Tesco and Asda, took advantage of the rules to sell cheaper CDs and DVDs imported from places such as Jersey and Guernsey.

Following pressure from the UK government and criticism in some quarters of the national media, Jersey's Economic Development Minister clamped down on the practice.

Earlier this year, Minister Philip Ozouf announced changes to the business laws that would stop them from using the island in such a way, and would eventually force some companies to leave.

Local companies, though, would not be affected. Asda and Tesco have said they are merely offering the best deal for customers.


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