How reduced VAT on books and media will impact Latvian publishing

From next year, changes in legislation will come into force, which will reduce the value-added tax on printed and electronic press and books to 5% instead of the previous 12%. On December 13, Latvian Television asked how this reduction would impact the market. 

A reduced value-added tax is a long-awaited and hard-fought decision. While in the European Union this tax rate is set at 6.6% on average, in some countries even 0%, it was one of the highest in Latvia at 12% and 21% in the past. In recent years, the Latvian books market was shrinking rapidly – the average circulation and the number of books newly issued and the procurement of libraries decreased.

The VAT reduction is currently a lifesaver for the Latvian bookshop and digital subscription media market, the Chair of the Publishers Association Board Renāte Punka said: "As of January 1, the price of all books currently on sale and not purchased by January 1 will fall by this percentage of reduction in the VAT rate. For a book that costs €2 right now, it probably won't be that much of a cut. On the other hand, for a book which now costs €20, €30, €40, there will be a reduction."

However, the newly issued printed press will not become cheaper. Rather, reducing VAT will reduce the potential price increases that inevitably await the sector as a whole.

Māris Ančs, director of the publishing company “Žurnāls Santa”, predicts that prices for printed materials could rise by 10-15%, which may cause individual media to consolidate or terminate their activities altogether.

It is a different story with electronic media. While elsewhere in the world digital magazine and newspaper subscriptions have become a normal consumer product, this market is in the developing stage in Latvia. For this sector, the VAT reduction will be even more pronounced.

The Ministry of Culture estimates that reducing the VAT rate on printed publications for the publishing industries in general will allow for a total of support EUR 4.75 million.

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