VAT Incentives for Press

Where
Lithuania
When
2020
Who
State Tax Inspectorate
Describe the main features of the policy/measure: 

The publishing production in Lithuania has always had a special status in VAT system - it was either released from VAT or had a VAT incentive. This is still the case today - based on the current law, the standard VAT rate is 21 percent, while its reduction is applied to books and periodicals.
Books have a VAT incentive of 9 percent. Incentive also applies to other non-periodical publications, such as textbooks, exercise books, encyclopaedias, dictionaries, manuals, informational brochures, photography and reproduction albums, children's picture, drawing or colouring books, music printed or in manuscript form as well as maps and hydrographic or similar charts. Reduced VAT rate does not apply to calendars, notebooks and similar printed materials.
Since 2019, the reduced VAT rate of 5 percent has been applied to periodicals - newspapers, magazines and other periodic publications, excluding publications with erotic or violent content, publications that do not comply with professional ethics and printed materials where more than four fifths of content consists of advertising.
Books and periodicals are considered to be important to the development of a more civic, informed and critically-minded society, whereas a regional press is an essential tool for informing citizens about current affairs, fostering discussions, mobilising communities and identifying "fake news".

What are the results achieved so far through the implementation of the policy/measure?: 

Besides the mere impact on the cost of books and periodicals, VAT incentive is considered to have a positive effect on:
1. Reading. VAT incentive for the press reduces the cost barrier for consumers when choosing between easily accessible informational sources and printed books/periodicals that are usually associated with higher quality;
2. Quality of supply. VAT has a significant impact on the revenue of the publishers; therefore, the incentive may have an indirect impact on the main factors on the supply side: diversity of the production, professionalism, content quality and independence;
3. Separate segments of the publishing industry. Press outlets that earn little income from advertising (regional newspapers, cultural, scientific and other specialised periodicals) would be more susceptible to the increased VAT rate. VAT incentive is important to the survival of the less commercialised press;
4. Public goals. VAT incentive contributes to creating an environment conducive to reading and creates conditions for the formation of a critically minded, democratic and creative society.

Financial resources allocated to the policy/measure in USD: 

There is no dedicated budget for this measure.

Partner(s) engaged in the implementation of the measure: 
Has the implementation of the policy/measure been evaluated?: 
YES
If yes, what are the main conclusions/recommendations?: 

A study conducted in 2016 on the impact of the reduced VAT rate for the press on public finance and culture suggests that, considering the ongoing changes of reading habits and the ever-increasing role of technologies, VAT incentive for the press should be maintained as a factor contributing to the promotion of reading and therefore should become an integral part of the state's reading promotion strategy. One of the recommendations is to constantly observe and analyse VAT incentive for the press in a broader economic context: observe its cost in relation to other incentives, evaluate its significance in the press support budget, monitor the publishing sector's economic vitality, prices of publications and affordability. It is also recommended to consider applying the VAT incentive to digital publications.

Goal(s) of UNESCO's 2005 Convention
Cultural Domain(s)
Publishing