Dear pamandus,
Below are my findings, separated by country.
VAT in the United Kingdom
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Books and periodicals are zero-rated under the VAT regulations of the
United Kingdom. Publishers, distributors, and vendors are therefore not
responsible for paying VAT on the newspapers they respectively publish,
distribute, and sell. Publishers may nonetheless apply to recover the
cost of VAT they paid on supplies that were used in the manufacture
of newspapers.
The VAT Guide published by Her Majesty's Customs and Excise explains in
subsection 3.3 that there are three rates of VAT.
"3.3 How many rates of VAT are there?
"There are three rates of VAT:
"* a standard rate, currently 17.5%;
"* a reduced rate, currently 5%; and
"* a zero rate."
HM Customs and Excise: Notice 700, The VAT Guide: PDF file
http://www.hmce.gov.uk/channelsPortalWebApp/downloadFile?contentID=HMCE_CL_001596
HM Customs and Excise: Notice 700, The VAT Guide: download page
http://www.hmce.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_001596&propertyType=document
HM Customs and Excise: Introduction to VAT
http://www.hmce.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_001222&propertyType=document
Schedule 8 of the Value Added Tax Act includes a table of zero-rated
supplies on page 17, showing that "Books, etc." are currently designated
as Group 3.
On pages 19 to 20, we find a detailed list of the items gathered into
Group 3.
"Group 3 -- Books, etc.
"Associated notice: 701/10 Zero-rating of books etc.
"Item No.
"1. Books, booklets, brochures, pamphlets and leaflets.
"2. Newspapers, journals and periodicals.
"3. Children's picture books and painting books.
"4. Music (printed, duplicated or manuscript).
"5. Maps, charts and topographical plans.
"6. Covers, cases and other articles supplied with items 1 to 5 and
separately accounted for."
HM Customs and Excise: Value Added Tax Act: Schedules 7A, 8, and 9: PDF file
http://www.hmce.gov.uk/channelsPortalWebApp/downloadFile?contentID=HMCE_CL_000136
HM Customs and Excise: VAT liability law: download page
http://www.hmce.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000136&propertyType=document
Notice that item number 2 reads, "Newspapers, journals and
periodicals." Hence, newspapers are deemed zero-rated supplies under UK
tax law. This means, according to the VAT Guide, that VAT is not payable
on newspapers.
"Is VAT payable on zero-rated supplies?
"VAT is not payable on zero-rated supplies, and an invoice for a
zero-rated supply will not constitute a VAT invoice (paragraph 15.10
explains why this is important for tax purposes)."
HM Customs and Excise: Notice 700, The VAT Guide: PDF file
http://www.hmce.gov.uk/channelsPortalWebApp/downloadFile?contentID=HMCE_CL_001596
GST in Australia
----------------
It is unlawful in Australia to make contractual arrangements for
apportioning the tax burden of GST in any way other than that stipulated
by the Australian Taxation Office. Thus, the publisher, distributor,
and vendor of a newspaper are individually responsible for their sale
of newspapers.
Note, first of all, that newspapers in Australia include the value of
GST in their cover price.
"Q. Does GST apply to the cover prices for the sale of The Examiner and
other publications it produces?
"A. Yes.
"Q. Will cover prices printed on the companys publications include GST?
"A. Yes, all cover prices will be GST inclusive."
The Examiner: About The Examiner: The Examiner and the GST
https://secure.examiner.com.au/GSTInfo.asp
If the business that sells a newspaper is very small, it may not be
required to pay GST on the goods that it sells. In particular, if the
annual turnover of a firm does not meet or exceed $50,000 and if the
firm does not operate taxi cabs, it is not required to register for GST.
"GST for small business
"This guide explains what these businesses need to do to meet their
GST obligations:
"* businesses with an annual turnover of $50,000 or more ($100,000 or
"* businesses with an annual turnover of $50,000 or more ($100,000 or
more for non-profit organisations)
"* businesses with a lower annual turnover that choose to register for
GST, and
"* businesses that provide taxi travel."
Australian Taxation Office: GST for small business: GST sales, purchases
and credits
http://www.ato.gov.au/businesses/content.asp?doc=/content/20724.htm&page=1&H1=&pc=001/003/022/002/014&mnu=3687&mfp=001/003&st=&cy=1#P167_10384
Thus, a very small local publisher may not be required to pay GST on the
newspapers it sells. A small-time vendor that sells newspapers may also
be exempt if it falls under the $50,000 threshold.
However, a vendor or distributor has already paid GST on the value of
the newspapers supplied to it by the publisher. In order to recover
this cost, vendors and distributors must register with the Australian
Tax Office and apply for a GST credit. It is unlawful for a vendor or
distributor to recover the GST by any other means, such as a direct
payback from the publisher.
"We use the term GST credit to describe the GST term input tax credit. A
GST credit is what you claim to get back the GST included in the price
you pay for most goods and services you purchase for your business."
Australian Taxation Office: GST for small business: GST sales, purchases
and credits
http://www.ato.gov.au/businesses/content.asp?doc=/content/20724.htm&page=1&H1=&pc=001/003/022/002/014&mnu=3687&mfp=001/003&st=&cy=1#P167_10384
"You are entitled to claim GST credits for the GST included in your
business purchases if you are registered for GST and:
"* you purchase something to use solely or partly for your business
"* the price includes GST, and
"* you have a tax invoice from your supplier."
Australian Taxation Office: GST for small business: Part 3 - Claim GST
credits for your taxable business purchases
http://www.ato.gov.au/businesses/content.asp?doc=/content/20724.htm&page=6&H6=&pc=001/003/022/002/014&mnu=3687&mfp=001/003&st=&cy=1#P167_10384
The publisher of a newspaper, as the manufacturer of the product, cannot
claim a GST credit for the newspapers themselves, though it can still
apply for GST credits against the cost of taxable supplies that were
used in the manufacture of the newspaper. Because the publisher is the
originator of the newspaper as a finished product, it also originates
the GST that is applied to each copy of the newspaper.
As the newspapers travel through the supply chain, being sold (and
perhaps resold) from distributor (and perhaps to vend), each firm along
the way must in turn pay the GST originated by the newspaper publisher
and subsequently apply for a refund of this sum by filing for GST credits
with the Australian Taxation Office. Final payment of the GST is made by
the consumer. The law does not provide for an alternative to this system.
The publisher must report GST on its sales, and pay the amount it is
obliged to have collected through those sales, on a quarterly or monthly
basis. The smallest businesses are eligible for annual GST reporting
and payment.
"Am I eligible to pay quarterly GST instalments?
"To be eligible to pay quarterly GST instalments, you must:
"* have an annual turnover of $2 million or less
"* pay GST quarterly
"* have lodged an activity statement for at least two quarters (or four
months if you previously lodged your activity statements monthly)
"* have lodged all previous activity statements, and
"* not be in an overall GST net refund position in the previous year,
disregarding the first activity statement you lodged."
Australian Taxation Office: GST essentials: Options for reporting and
paying GST - businesses that report GST quarterly
http://www.ato.gov.au/businesses/content.asp?doc=/content/13087.htm&page=4&H4=&pc=001/003/022/002/001&mnu=4409&mfp=001/003&st=&cy=1
"Businesses that have an annual turnover of $20 million or more are
required to report and pay their GST monthly and to deal with the ATO
electronically. Some businesses with an annual turnover of less than
$20 million have also chosen to report and pay their GST monthly."
Australian Taxation Office: GST essentials: Reporting and paying GST -
Businesses that report GST monthly
http://www.ato.gov.au/businesses/content.asp?doc=/content/13091.htm&pc=001/003/022/002/001&mnu=627&mfp=001/003&st=&cy=1
"Clients are eligible to report GST annually if:
"* their projected annual turnover for GST in 2004-05 is less than the
registration turnover threshold, that is:
o $50,000 for businesses, or
o $100,000 for non-profit bodies,
"* they are not required to register for GST, and
"* they have not elected to pay GST by installments advised by the
Tax Office."
Australian Taxation Office: GST essentials: GST and annual reporting
http://www.ato.gov.au/businesses/content.asp?doc=/content/51566.htm&pc=001/003/022/002/001&mnu=627&mfp=001/003&st=&cy=1
GST in Canada
-------------
The Canadian system of GST is identical to the Australian one, save for
differences in terminology and in the range of exemptions. Newspapers
are taxable at the full rate, so anyone who sells them must collect GST
from the buyer as a fixed percentage of the sale price. The collected
sum is then remitted to the taxation authority, Revenue Canada. The
publisher of a newspaper originates the GST charge on the finished item,
although it may apply for an input tax credit (ITC) against the cost of
taxable goods that were used to manufacture the newspapers. The publisher
collects GST from the distributor and remits it the Canada Revenue Agency.
The distributor must pay the GST to the publisher, and can later apply for
an ITC to recover this cost. When the distributor resells the newspaper
to a vendor, it must add GST to its selling price, collect this sum from
the vendor, and remit it to Revenue Canada.
The vendor, having paid GST to the distributor, recovers the cost by
applying for an ITC with the Canada Revenue Agency. Finally, the vendor
charges GST to the consumer, who cannot apply for a rebate in the form
of an ITC, since the very purpose of the GST is to gain revenue from
end-user consumption.
"As a GST/HST registrant, you are responsible for collecting GST or
HST from your customers on all taxable (except 0%) goods and services
you sell or supply in Canada (except some taxable real property).
"You have to hold this GST/HST in trust until you send it to us by filing
a GST/HST return.
"You need to let your customers know if the GST/HST is being applied
to their purchases. For taxable sales or supplies (except 0%), you
either show:
"* the total GST/HST included in the price you charge for your goods
and services, or
"* the price and the total GST/HST the customer pays or owes.
"If you choose to indicate the rate of tax for sales or supplies in the
provinces with HST, you have to show the rate of 15%.
"You can use cash register receipts, invoices, or contracts to inform
your customers, or you can post signs at your business location."
Canada Revenue Agency: Tax: Businesses: GST/HST: Responsibilities
http://www.cra-arc.gc.ca/tax/business/topics/gsthst/how/responsibilities/menu-e.html
"As a GST/HST registrant, you may recover the GST/HST you paid or owe on
purchases and expenses related to your commercial activities by claiming
input tax credits (ITCs) on your GST/HST return."
Canada Revenue Agency: Tax: Businesses: GST/HST: input tax credits
http://www.cra-arc.gc.ca/tax/business/topics/gsthst/itc/menu-e.html
Other
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It may interest you to know that the European Publishers Council
has recommended that every member country of the European Union make
reading matter of all kinds, including periodical publications such as
newspapers, exempt from sales tax. At present, only Belgium, Denmark,
Finland, Norway, and the UK offer such an exemption.
European Publishers Council: Value Added Tax and the publishers
http://www.epceurope.org/issues/vat.shtml
Regards,
leapinglizard |
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