Tax dodgers flee Channel Islands

Online entertainment retailers are preparing to leave the Channel Islands after the UK Government said it will close the VAT loophole next April.

MCV understands online retail behemoths may move to Asia, Switzerland and even the US to avoid paying tax on CDs, DVDs and some games.

For years, campaigners have tried to end the loophole relied on by the likes of HMV, Play.com, Amazon, Asda and Tesco.Last week, the Coalition Government finally caved, but the decision only covers the Channel Islands.

I believe all retailers should compete on a level playing field. But the more tenacious companies have already examined alternative fulfilment centres in Asia, Switzerland and the US that will avoid the VAT payment,” said Gian Luzio, who has worked for Channel Island retailers Play.com, The Hut Group and now Bee.com.

ERA’s director general Kim Bayley added: In a globalised world it does not make sense to address an anomaly in the Channel Islands alone. Much of this business will simply be displaced elsewhere.”