News / 22.04.2016

UJF: cut in digital content VAT would boost media

UJF head of advocacy Petri Savolainen says that a reduction of VAT envisaged by draft change to the tax rule by the EU Commission would ease the situation facing the press, where high taxation costs have restricted the availability of online media.

Savolainen believes that optimally the reform would be carried out in Finland very rapidly.

“The state can boost democracy and freedom of expression using tax relief on journalistic content.”

In early April, the EU Commission published an action plan aimed at modernising VAT in the EU. The Commission sees this as “the first step towards a single EU VAT area which is equipped to tackle fraud, to support business and help the digital economy and e-commerce.”

The action plan gives scope for reducing VAT on digital content, including tablets and e-books. At present, VAT on digital content is 24 per cent, while that on papers is 10 per cent.

In recent years, public broadcasting has been seen as a threat to commercial media. Savolainen says that the point is not to change this by constraining the public broadcaster, but that by reducing VAT on digital content would create a more level playing field.

“Politicians have responded sympathetically to the issue. The obstacle is seen to be the EU restrictions, which the reform would eliminate.”

 According to the Commission, the action plan aims in part to “update the framework for VAT rates and set out options to grant Member States greater flexibility in setting them.” This would allow for reducing VAT on digital content.

“If the reform comes as a separate regulation this year, why shouldn’t it be put into effect in Finland already at the beginning of next year?” says Savolainen.

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