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1.18.2006
  VAT Free Music Thanks To Guernsey Loophole
Apple, the US computer giant, is planning to set up business on Guernsey to exploit a tax loophole that will allow it to sell VAT-free music to British consumers.

Over the past two years other retailers including Tesco, Asda, Britannia, HMV, Amazon and Woolworths have all set up delivery operations in the Channel Islands in onder to exploit a law which allows retailers outside the European Union, sell goods worth less than £17 to UK consumers free from VAT.

The 'Value Added Tax' VAT is Brittish tax for right to do business in Britain. Each year the Government sets a figure - it differs year to year - which if met by your company, you need to pay VAT. Currently it's a 17.5% surcharge for most products and services.

These fulfilment businesses have allowed retailers to sell CDs and DVDs by mail order usually for between £3 and £5 cheaper than high street shops.

Apple confirmed that it is looking at setting up a similar operation on Guernsey. This would allow it to lower the prices of music downloaded from it's popular iTunes Service from 79p, perhaps to as little as 67p.

Nick Goulding, chief executive of the Forum for Private Business, is bitter: "This is more evidence of the urgent need for Gordon Brown to end this cynical tax dodge."
 
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