Raspberry Pi Balks At UK Tax Regime

by Robert Lee, Tax-News.com, London

17 January 2012

The UK's tax regime makes it far too expensive for an electronics company to manufacture in the country, the computer company Raspberry Pi has said, looking to Taiwan and China instead to produce its goods.

The company, a charity which aims at producing small and cheap computers for children, has recently begun manufacturing its products. It had hoped to carry out the entire process in the UK, investigating a number of possible manufacturers. However, among the problems encountered was the anticipated tax burden on production.

According to the company, if it were to build its Raspberry Pi model in the UK, it would "have to pay a lot more tax". It points out that if a British company imports components, tax must be paid on those components. This means an additional cost, as most components are not made in the UK. On the other hand, if a completed device is made abroad and imported into the UK, it does not attract any import duty.

In a statement, the company argues that the system "means that it’s really, really tax inefficient for an electronics company to do its manufacturing in Britain, and it’s one of the reasons that so much of our manufacturing goes overseas. Right now, the way things stand means that a company doing its manufacturing abroad, depriving the UK economy, gets a tax break. It’s an absolutely mad way for the Inland Revenue to be running things, and it’s an issue we’ve taken up with the Department for Business, Innovation and Skills."

As a result, the first batch of Raspberry Pis will be made in Taiwan and China. UK possibilities will still be investigated, and the company's 'Model As' (the demand for which is expected to be lower than the overseas built 'Model Bs') could be built in the UK under current plans, in spite of the relative economic inefficiency compared to Asian options.