Alison Flood 

Ebooks VAT should be slashed to zero in 2012 budget, say publishers

Publishers Association adds voice to 5,000-strong petition calling for VAT on ebooks to be abolished, to align with print books
  
  

Budget blow … publishers argue that ebooks' current 20% VAT rate is out of proportion.
Blowing the budget … publishers argue that ebooks' current 20% VAT rate is out of proportion. Photograph: Martin Argles for the Guardian Photograph: Martin Argles/Guardian

Publishers are calling on the government to "urgently" reduce the 20% value added tax rate currently applied to ebooks in the UK, as the digital books market experiences "exponential" growth.

Ahead of this afternoon's budget statement, the Publishers Association has made representations to Chancellor George Osborne arguing that the rate of VAT on ebooks, which stands at 20%, should be reduced to the zero-rating of print books. Publishers believe ebooks and print books should be treated the same when it comes to VAT, as both deliver the same "educational, cultural and social benefits". They say that "urgent action" is required to reduce ebook VAT rates as the digital market experiences a rapid pace of development and sales that "continue to grow exponentially".

The call from publishers comes as over 5,000 people have signed a petition to the Treasury asking for VAT on ebooks to be abolished, saying that "a book should be defined by what it provides, not the material that is used to produce it, and the more environmentally friendly version should be encouraged and not discouraged by VAT".

France and Luxembourg both reduced their ebook VAT rates to 5.5% and 3% respectively earlier this year. The EU has said that it is planning a review of VAT, with a memo issued in December stating that "similar goods and services should be subject to the same VAT rate and progress in technology should be taken into account in this respect".

"The Publishers Association contends that there is an extremely strong case to make for reducing VAT rates on ebooks and aligning them with the zero-rate enjoyed by print books in this country. Other countries have already reduced their ebook VAT rates, and we believe the UK could and should follow suit," said PA chief executive Richard Mollet.

"Waiting until 2015, when changes to the VAT regime will be implemented, is far too late for our British ebook retailers. If government won't take action now, we urge them to support us in Europe to amend the VAT directive so that we can all enjoy the benefits of reduced rates on ebooks."

 

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