Sunday 11 December 2016

New rules could spell end of high taxes on electronic school books

Published 01/12/2016 | 18:00

At the moment EU rules mean that all electronic publications have VAT (valued added tax) of 23pc levied on them at the point of sale.
At the moment EU rules mean that all electronic publications have VAT (valued added tax) of 23pc levied on them at the point of sale.

New rules being proposed by the European Commission could see an end to high taxes on electronic school books.

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At the moment EU rules mean that all electronic publications have VAT (valued added tax) of 23pc levied on them at the point of sale.

But there has been a long-standing practice in this country that VAT is zero rated on traditional school books.

Thousands of school children now use iPads and tablets instead of hardback text books.

Downloading the e-text books should be much cheaper than buying an old-style textbook, but the imposition of VAT at 23pc wipes out much of the gain.

The European Commission wants the VAT rules for e-commerce across the trading bloc.

As part of this, governments could impose the same VAT rate on electronic publications as print publications.

A spokeswoman for the Commission said: “E-books and other online publications would be charged the same reduced VAT rates as print publications.”

Educational publishers say that e-book costs are 30pc cheaper than print publications. But the lower prices are being cancelled out by a 23pc VAT rate which is not applied to traditional schoolbooks.

Up to 100 schools are understood to use e-books.

The European Commission proposed changes would mean equal rules for taxing e-books, e-newspapers and their printed equivalents.

“Current rules allow member states to tax printed publications such as books and newspapers at reduced rates or, in some cases, super-reduced or zero rates.

“The same rules exclude e-publications, meaning that these products must be taxed at the standard rate. Once agreed by all member states, the new set-up will allow – but not oblige – member states to align the rates on e-publications to those on printed publications.”

The Department of Finance has long blamed EU rules for the fact that it has to impose VAT on e-textbooks, even though there is a zero rate on print textbooks.

Dublin MEP Brian Hayes said there would now be pressure on the Government, if the rules are adopted, to reduce the VAT rate to zero on e-textbooks.

The Commission has proposed simplifying VAT requirements for a host of online transactions, the final piece in a series of measures to boost Internet commerce across the European Union.

The Commission has already published plans to make parcel deliveries more affordable, protect consumers when they buy online and to limit “geo-blocking”, the practice of barring consumers in one country from buying from a provider in another.

The Commission’s vice-president for digital affairs Andrus Ansip said: “We are delivering on our promises to unlock e-commerce in Europe ... Now we simplify VAT rules: the last piece in the puzzle.”

The Irish Educational Publication Association, whose members publish 95pc of Irish schoolbooks, said it has written a number of times to the Minister for Finance seeking its removal or reduction of VAT on e-textbooks.

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