The UK decision to “axe the reading tax”, the abolishment of the 20 % value-added tax (VAT) on digital editions, has been fast-tracked and entered into force on May 1, 2020.
Initially, chancellor Rishi Sunak had announced that the UK would abolish the VAT rate on e-books, online newspapers and digital magazine editions from 1 December 2020. The decision to do so seven months earlier goes beyond the response to the initial concern of eliminating what the UK Publishers association considered an “illogical and unfair tax” and to thus align digital publications with physical ones. The plans have been significantly fast-tracked in order to make reading more accessible for readers asked to stay at home and to support the UK publishing industry during the COVID-19 outbreak.
The chancellor said the zero rate VAT will apply to all e-publications starting May 1, in addition to an increase of £35 million in government advertising revenue for newspapers as part of the coronavirus communications campaign.
Stephen Lotinga, CEO of the Publishers Association, reacted positively to this announcement. “We’re delighted that the government has taken this step to significantly fast-track the plans to scrap VAT on ebooks and journals. This is a boost to readers, authors and publishers which is especially important at this difficult time. We hope that it will enable many more people to easily access and benefit from the comfort, entertainment and knowledge that books provide,” he said.
The UK has now joined other states such as France, Italy, Belgium and Portugal who have lowered or removed these taxes, a step made possible by legislative changes in the European Union (EU) in October 2018.
While the IPA is working on updating the VAT report for 2019, an overview of VAT rates around the world in 2018 can be found here.