BUSINESS

VAT on internet sales from Jersey

The Jersey government has said it will crack down on traders who use the island to avoid VAT on internet sales of low-value goods such as CDs, DVDs and health foods. Under EU law, traders outside the EU do not have to charge VAT when they sell goods valued at less than £18 to EU customers. Several internet traders have set up Jersey-based operations for that reason, but the Jersey government believes that negative publicity has damaged the island’s reputation.

Businesses that buy stock in Jersey and hold it there before sale will not be affected, but businesses that are in reality based in the UK will be given a year to cease operations. Some retailers have indicated they will switch their activities to other states with similar tax regimes, such as Guernsey. There have been no moves within the EU to end the VAT exemption for low-value goods and there is some scepticism about whether the Jersey government will maintain its stand.