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The Viability of removing VAT on Digital Publications

Electronic publishing has been steadily on the rise with the rapid advancement of technology since the start of the 2000’s. From new platforms giving opportunities for creatives to self publish, to existing publishers changing their strategies to accommodate and facilitate the rapid rise of self-publishing, the digital publication landscape has changed tremendously. Gone are the days when publishing was limited to physical print, and this has had an effect on the industry, its revenue and its sustainability based on VAT and tax liabilities. Let’s explore this a little further, considering that there has been a surge of questions around the viability of VAT on digital publications, and how it affects the longevity of an industry that brings so much joy to consumers from all walks of life.

What is a Digital Publication?

A digital publishing platform or publication is a tool that allows consumers to publish their content online or digitally. These publications allows for easy consumption of information on smartphones, tablets and similar device offerings. Digital publications often have smaller overheads, but even smaller profit margins on their products (content), hence the conversation around VAT being started, with a view towards the industry remaining financially viable as we head into the 2020’s.

The Effect of VAT on Digital Publications

Recent online reports have argued for zere rate of VAT for digital publications. UK-based readers currently pay 20% VAT for online newspapers, magazines, ebooks, audiobooks and similar consumables. This contrasts their print equivalents, which have been zero rate for as long as one can remember. The VAT responsibility for digital consumption falls onto the consumer. This leads to higher pricing, which drives consumers away from the industry, especially in tough economic climates. In an increasingly digital world, a resolution in this regard becomes important.

Calculating Taxes

How Viable is it to Remove VAT from Digital Publications?

A key EU ruling has meant that for the first time, it is possible for the VAT to be removed from digital publications in forthcoming budgets in the UK. Whether this happens or not, is largely dependant on the key players in the industry. Research suggests that for the consumer, as well as economically, the case is strong. Governments have a responsibility not to create barriers with regards to reading and learning, albeit that access to information is far more widespread now than it has ever been in the past. Removing VAT from digital publications could also affect how all digital companies look at VAT, which could cause longer term stumbling blocks for VAT authorities around the world.

A Collective Solution That Works For Everyone

As the physical and digital players in the publishing industries are at loggerheads over this, it may be time for a collaborative effort that works for both parties. Physical publishers and becoming all the more digital, as they adapt to the times. Digital publishers tend to have less costs and overheads, which does make them more viable to pay VAT liabilities, and perhaps this burden should not fall squarely on the consumer. A discussion around giving everyone a slice of the pie, reducing the burden on publisher and consumer, while also ensuring due VAT applies, may be the only way to reach an effective solution on a matter that will shape how the industry performs in the coming years. It’s going to be interesting to see how it all plays out in the coming months.

While this article aims to provide an overview of the technicalities around VAT on digital publications, it should not be considered a legal authority on the matter. You are encouraged to speak to an expert if you need more information, or if you have specific questions about the processes mentioned.

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