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Raspberry Pi begins manufacture in Asia

Foundation behind $35 device says UK tax laws drove it to foreign producers

The Raspberry Pi Foundation has begun manufacture of its $35 ARM GNU/Linux machine in Taiwan and China, a move which it says it was driven to by prohibitive UK tax legislation.

Initially, the group had planned to manufacture the device in the UK, boosting employment and industry. However, because of multiple issues encountered with domestic manufacture, the Foundation was forced to look elsewhere.

UK companies also quoted a completion time of around 13 weeks for the machine, around four times that offered by Asian plants, whilst costs for the device would have been pushed up unacceptably for the charity.

Even at the cheapest quoted cost, which would have meant a severely restricted production run, UK manufacture would have cut an extra $5 from the margin on each machine.

However, the biggest barrier to domestic production, says the charity, was UK tax law. Because UK law requires companies to pay import tax on electrical components, and not finished devices, importing parts for local building would add yet further cost.

By constructing the machine abroad and importing it whole, the charity has saved itself significant cash, highlighting a situation which it says it harming domestic industry considerably.

"Simply put, if we build the Raspberry Pi in Britain, we have to pay a lot more tax," reads a post on the foundation's blog.

"If a British company imports components, it has to pay tax on those (and most components are not made in the UK). If, however, a completed device is made abroad and imported into the UK - with all of those components soldered onto it - it does not attract any import duty at all.

"This 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."

The Raspberry Pis currently in production are the Model B units, which offer enhanced ram and ethernet capabilities over the cheaper Model A, which the Foundation expects to be in lesser demand. Currently, the possibility of manufacturing those Model Bs in the UK is being investigated.

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