Publishers plead for e-books tax cut

Paberraamatute käibemaks on üheksa protsenti, digiraamat defineeritakse aga elektroonilise teenusena ja selle käibemaks on 20 protsenti.

PHOTO: Marko Saarm / Sakala

Publishers Association has written Prime Minister Andrus Ansip an appeal asking his help lowering digital books’ value-added tax to the level of books on paper.

In Estonia, value added tax rate on books stands at 9 per cent; even so, e-books are electronic services in eyes of the law, thus undergoing the general VAT rate of 20 per cent. The issue is not one of Estonian legislators; rather, this is being prescribed by the VAT Directive of the European Union.

As assessed by Publishers Association, the VAT Directive is discriminatory, hampers development of publishing of scientific and educational material, and forces European publishers to compete with such countries as USA where zero VAT applies to digital publications.

The association argues: «As VAT on books means taxation of reading, so VAT on e-books means taxation of technological progress: it makes no difference whether a book is printed or comes in digital format, downloadable or on paper; what actually matters is the content, to which a VAT rate as low as possible ought to be applied.»

«The benefits of books and magazines, in whatever format – digital, printed or in audio – is known to all: material written professionally will help raise levels of education and reading, creating options for increased quality of life and broader employment; supporting societal developments,» chairman of the association’s board Mart Jagomägi writes the Prime Minister.

«We are not applying for new limits on the VAT regime; rather, we are applying for the current regime to be adjusted to the technological progress and the acknowledgement of the fact that a book’s value will not depend on its format nor on the way it is obtained by a reader,» continues the appeal.

Therefore, hopes the association, the Prime Minister will make a proposal supporting knowledge-based economy and information society, while also enhancing reading and e-commerce. «Estonia is used to advertise itself as an e-state. Even here, Estonia might have an excellent opportunity, by making a corresponding proposal, to show others the way,» think the publishers.

This week, Prime Minister Andrus Ansip is on vacation. Finance Minister Jürgen Ligi told Postimees the subjects has repeatedly been discussed, underlining that, pursuant to EU directive, an e-book is a service and not a book – and, therefore, lowering its VAT rate is not an issue. «Regrettably, also, taxes cannot be done away with, replacing them with pleasant budget costs,» said Mr Ligi.

«In the Directive, tax carve-out on e-books is also prohibited for the reason it has a price advantage even without it. The [e-book] reader does cost something, but not as much as a book shelf or the floor area under it, which contain taxes and get no incentive.»

«VAT, in itself, is neutral; politicians should not pigeonhole products according to nobility and, thus, it should have no exceptions. Effective social or cultural policy can, let’s not forget, be pursued with help of taxes collected, not taxes uncollected,» noted Mr Ligi.

Mr Ligi added that the weakness of tax carve-out clauses will always be evident as one takes a closer look where the costs go.

«And, while it is often assumed that state budget is a trash bin which can simply be emptied out, let the culture lovers remember: in Estonia, this is what carries the culture – to a far greater degree than in any other EU member state. Ergo, it needs the taxes,» reasoned Mr Ligi.