Sri Lanka's Book Industry Faces Crisis Amid VAT Burden

Sri Lanka's 18% VAT on books threatens the publishing industry, increasing costs, reducing sales, and risking jobs. Stakeholders urge its removal for survival.

on Dec 11, 2024

Sri Lanka's publishing industry is facing serious concerns as an 18% VAT on books is causing serious difficulties. Industry experts have warned that this has threatened the survival of the entire sector and caused ripple effects throughout the production chain, from raw material imports to final sales, by increasing prices, making books increasingly unaffordable for consumers.

At a media briefing, the stakeholders further urged the government to remove VAT from books in the next national budget. They stated that such a tax on resources of knowledge and learniong is far-reaching, emphasizing the consequences of it for future of people of the country.

Sri Lanka Book Publishers Association President Samantha Indeewera explained that nearly all materials used in publishing are imported. While only 12 large publishers are liable to pay VAT directly, smaller publishers bear the brunt of the tax through distribution networks, ultimately passing the burden onto stakeholders in the value chain, including the consumers.

Indeewera also pointed out that this tax violates the UNESCO Florence Agreement of 1950, which prohibits taxation on intellectual property.

Sri Lanka Book Importers and Exporters Association President Pradeep Samaranayake highlighted that Sri Lanka is the only SAARC nation imposing VAT on books. Including associated levies, the tax burden can reach 33% for imported books. A recent survey revealed a 17% drop in freight unit sales compared to the previous year, driven by high post-crisis prices, exchange rate fluctuations, and VAT.

This crisis has endangered nearly 10,000 jobs across the country, according to the All Ceylon Booksellers Association. Secretary Manura Wanniachchi noted that sales dropped by 50% after COVID-19 and have plummeted an additional 30% following the VAT's introduction. Current projections suggest a 60% probability of books remaining unsold.