PA calls for abolition of 20% VAT on e-books

The Publishers Association is calling for the government to abolish the 20% VAT rate on e-books in the UK, putting pressure on chancellor of the exchequer George Osborne ahead of the Budget today (21st March) to match the zero-rating on print books for digital editions.

In a statement, the PA said it needed "urgent action" to reduce VAT rates, as the e-book market grows "exponentially". It said e-books should be treated "equally" to print books as they deliver "the same educational, cultural and social benefits".

The statement also stressed that UK e-tailers would be better able to compete with other companies operating out of countries in the EU, such as France and Luxembourg, which have bucked EU law to set VAT on e-books at 5% and 3% respectively.

The Booksellers Association has also campaigned against the differential rates of VAT that, since the beginning of the year, have given Amazon, which sells e-books out of Luxembourg, a competitive price advantage over other e-booksellers.

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

In 2015 an EU directive will reverse how VAT is applied on e-books, meaning that the supplying company will have to apply the rate of the country where the customer is based, similar to how it operates for physical products.

But Mollet added: "Waiting until 2015 when changes to the VAT regime will be implemented is far too late for our British e-book 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 e-books."