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VAT on e-books aids local publishing industry

The announcement by the Minister of Finance in the 2013 Budget that all foreign businesses supplying e-books in SA will be required to register at VAT vendors, has led to enthusiasm in the local publishing industry as the revised legislation will do much to level the playing field.

Having headed the campaign to amend the levying of VAT on electronic transactions, the Publishers' Association of South Africa (PASA), in collaboration with the South African Booksellers' Association, believes that the revised legislation will do much to level the playing field within the local publishing industry.

VAT on e-books aids local publishing industry

Competing fairly

"While PASA's long term stated objective is that VAT should not be levied on books, it is better to have a system where everyone is charged, than the one that has existed until now. We are very much in favour of the legislation and support it fully," comments Eugene Ashton, sales director of Jonathan Ball Publishers.

Ashton says the new legislation does not come as a surprise as governments around the world have been working on ensuring that VAT (or sales tax where it applies) is collected on sales that occur in their respective territories.

"South Africa has now created a legislative framework which will require foreign retailers selling into South Africa to register as VAT vendors. Simply put it means that companies that have distribution rights in South Africa can compete fairly with foreign retailers selling directly. In the long-term it will do much to promote a healthy retail book trade, making it more likely that we retain a functioning publishing industry," he explains.

While locally print is still very much the dominant format, he says like other parts of the world, digital sales are fast gaining ground. "In most of the big English language markets digital sales account for as much as 50% of total revenue, more if you look at units. In South Africa, that number is around 20% of revenue."

VAT on e-books aids local publishing industry

Digital at Book Fair

"So while this means that we are still very reliant on print sales, digital is critically important. Digital will be a key focus at this year's South African Book Fair and, as a main exhibitor we look forward to both gaining and sharing insight into this fast growing trend," says Ashton.

Louise Barry-Taylor, executive of sales and sponsorship of South African Book Fair adds, "With the rapid growth of e-publishing, the Fair allows educators, the public and the publishing world access to the latest technological developments in e-reading. Technology now not only allows access to books at the touch of a button, but access to a wide array of both learning and recreational materials that are now easily available on your mobile phone. The Fair is the ideal place for even the most technologically challenged to familiarise themselves with the latest technological and e-publishing offerings."

Although the publishing industry made the initial submission to Treasury resulting in the new legislation, Ashton emphasises that its impact is much broader than just the book industry. "The new legislation covers all retailers selling online into South Africa. Initial estimates are that it could result in revenue of just under R1 billion, which will be a significant benefit to all South Africans," he concludes.

The South African Book Fair will take place from 13 -15 June 2014 in Cape Town. Tickets for the Fair will be on sale at the door at a cost of R50, and R20 for pensioners. Children under the age of 18 receive free entry.

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