European rules allow companies based outside the EU (including the Channel Islands) to supply goods direct to customers within Europe free of VAT, provided they cost less than £18.
Accordingly Channel Island firms are able to sell goods at a considerably lower price than firms based in the UK, which have to include the UK VAT rate of 17.5% – a fact that, according to the Telegraph newspaper, has not gone unnoticed by large retailers such as Tesco and Amazon.
Around 100 retailers, says the Telegraph, have set up bases in Jersey to sell cheap items such as CDs, contact lenses and books.
Such sales are legitimate, but the issue was due to be raised at yesterday's meeting of the Treasury Sub-Committee, where John Nealey, the Economic Secretary to the Treasury, was due to be quizzed by MPs, concerned at the loss of tax revenue from these large corporations.
In 2003, former MEP David Bowe raised similar concerns with the then EU Commissioner for the internal market and taxation, Fritz Bolkestein, after complaints by Leeds-based video games retailer Gameplay.com.
