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Changes in legislation will take place in Latvia next year, which will reduce the value-added tax on printed and electronic media and books from 12% to 5%.
Value-added tax has been reduced after a long and hard fight. In the European Union, this tax rate is set at 6.6% on average, while in some countries it is even 0%; however, in Latvia, it was as high as 12% and 21% in the past. Latvia’s books market has been shrinking rapidly in recent years – the average circulation and the number of new books published, as well as library purchases, have decreased.
Currently, the VAT reduction is a lifesaver for the Latvian bookshop and digital subscription media market. Publishers Association Board Chair Renate Punka said: “As of January 1, the price of all books currently on sale and those not purchased by January 1 will drop by this percentage of the VAT reduction. For a book that currently costs €2, it won’t be much of a reduction. For a book that now costs €20, €30, or €40, it will be significant.”
However, new printing will not be less expensive. Rather, reducing VAT will limit the price hikes the sector as a whole is unavoidably destined to face.
“Zurnals Santa’s” director Maris Ancs predicts that prices for printed materials will increase by 10-15%, which can lead to media consolidation or even closure.
According to the Ministry of Culture, lowering the VAT rate on printed publications for the publishing industry, in general, will allow for total support of EUR 4.75 million.