Unpopular magazine tax postponed

Tax minister decides to delay implementation of new tax on magazines to determine how to impose it without significant price hikes or breaking international law

20 million kroner earmarked for independent media in developing countries (photo: iStock)
February 28th, 2012 2:33 pm| by admin
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After mounting pressure, the tax minister, Thor Möger Pedersen, has decided to postpone the implementation of a new law which would add enormous levies to magazines imported from outside the EU.

The government wants to close a tax loophole that allows publishers to avoid paying VAT by printing their publications outside the EU. But for the government to collect the 25 percent VAT on non-EU magazines, the postal service, Post Danmark, has warned it would have to charge recipients a 160 kroner levy to help defray the cost of sorting through the nine million magazines arriving in Denmark annually.

It is expected that this levy would cull readerships of many specialised publications from outside the EU and has led many to speculate that Denmark would be breaking an international convention guaranteeing the free movement of educational, scientific and cultural material.

As a result, Pedersen has decided to postpone the law's April 1 implementation. “We need to investigate it, so the government has decided to postpone the proposed law,” he told Politiken newspaper.

Pedersen added that it was never the intention to make magazines prohibitively expensive and that all the government wanted was to ensure that Danish printers could compete on the same footing as foreign printers.

“That’s why we are looking at different methods of collecting the VAT when the magazines enter Denmark in order to see if it can be done in a cost effective way,” Pedersen said.

While the government has said it would raise 60 million kroner by closing the loophole, Post Danmark has said it would cost 237 million kroner to manually sort the magazines, a cost it would recoup by charging the levy.

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