UK e-book prices to rise from 1st January 2015

[pdurrant]

Originally Posted by rkomar

I'm a bit confused as to why the VAT will have to come out of anyone's share of production. Are they including it in the list price? Over here, the equivalent sales tax is tacked on to the purchase price, and is understood to be going directly to the government. Were Amazon offering the ebooks at higher list prices but overall lower prices with VAT included?

VAT is always included in the list price for consumers. It's illegal to advertise products for consumers except with the VAT-inclusive price.

Prices without VAT may only be used when advertising to businesses.

[Rizla]

Originally Posted by fjtorres

Not sure why anybody would wonder.
Politicians and bureaucrats want what they always want: money they can control to buy votes and/or line their pockets. Everything else flows from there and if they nuke entire cottage industries, so be it.

The needs of the few (them) outweigh the needs of the many (everybody else).

The roots of this come from outside the ebook world so going into detail belongs elsewhere. (Geopolitics, for one. Sociopolitics, another.)

Originally many people had hopes for the EU as a organization that represented the "middle-class" (i.e. normal people's) interests. Sure, it's been proven to not be the case. Given a referendum, the French and the Dutch rejected the EU, but then had it foisted on them anyway.

But it's interesting. Who actually controls EU policy and what are its objectives? Anyway, I suppose the place for such a discussion is the P&R forum.

[fjtorres]

Originally Posted by pdurrant

VAT is always included in the list price for consumers. It's illegal to advertise products for consumers except with the VAT-inclusive price.

Prices without VAT may only be used when advertising to businesses.

At ibooks, it makes sense that the VAT come out first because the principle at Apple is that the publisher sets the price the consumer sees. They're fans of Agency, after all.

Some publishers may want to "eat" all or part of the VAT increase or simply raise the price to maintain (or increase) the current take. Both Apple and Amazon are leaving it to the publisher to decide...

[rkomar]

Originally Posted by pdurrant

VAT is always included in the list price for consumers. It's illegal to advertise products for consumers except with the VAT-inclusive price.

Prices without VAT may only be used when advertising to businesses.

Okay, thanks for the explanation (and the same to @thewitt). That explains some of the perceived difference in listed prices between Europe and Canada. Over here, the federal and provincial taxes are not included in the list price, which does make stuff appear cheaper than it really is.

[Ghitulescu]

Originally Posted by HarryT

As stated at the start of this thread, Ghitulescu, the whole point of this change in the law is to close a loop-hole in EU tax-law, which currently allows multi-national companies to avoid paying large amounts of VAT by basing themselves in low-tax countries such as Luxembourg.

Well, in case you didn't know, the VAT are deducted for companies, and only the end user pays for the cumulated "added" value .

Originally Posted by pdurrant

All companies avoid tax when they can. They are required to do so by their duty of care to their shareholders.

No kidding
Seriously, a company is probably one of the greatest farce played upon mankind.

Originally Posted by pdurrant

Avoiding tax is reducing your tax bill within the law.
Evading tax is reducing your tax bill by illegal means.

What's the difference? I mean, considering that big companies have their powerful lobby to "guide" the lawmakers tailor the laws to suit their interest.
Just imagine that with a peanuts sponsoring of some 50k$ the studios managed to extend the ancillary rights to 95 years (more than the copyright terms) and gain billions.

If you don't understand this (above) in a glance, it's difficult to explain it, even with more words.

[HarryT]

Originally Posted by Ghitulescu

Well, in case you didn't know, the VAT are deducted for companies, and only the end user pays for the cumulated "added" value .

Yes, of course I know that, but it doesn't change the outcome, which is that Amazon pay no VAT for eBook sales in the UK, because their eBook business is based in Luxembourg. The result of this is loss of tax revenue for the British government (and, indirectly, British people).

[jbjb]

Originally Posted by Ghitulescu

Seriously, a company is probably one of the greatest farce played upon mankind.

Really? If you don't approve of the existence of an economy involving companies, what alternative system do you prefer and in what way is it better?

/JB

[fjtorres]

Originally Posted by HarryT

Yes, of course I know that, but it doesn't change the outcome, which is that Amazon pay no VAT for eBook sales in the UK, because their eBook business is based in Luxembourg. The result of this is loss of tax revenue for the British government (and, indirectly, British people).

Kinda circular there since the VAT is paid for the consumer: British people, no?
Making Amazon collect VAT doesn't mean it comes out of their pockets.

That is why attempts at a sales tax on internet sales gets nowhere in the US: it is generally understood that it is a way to prop up legacy businesses at the expense of consumers. And consumers have made it clear they don't want that.

If EU consumers want to prop up legacy businesses that way, it is their privilege.

[HarryT]

Originally Posted by fjtorres

Kinda circular there since the VAT is paid for the consumer: British people, no?
Making Amazon collect VAT doesn't mean it comes out of their pockets.

But the principle of VAT is that people who spend their money in Britain pay tax which benefits other British citizens. That's what's not happening at the moment with Amazon ebook sales, Apple iTunes sales, etc.

[BearMountainBooks]

Amazon has sent out emails letting us publishers/writers know about the change. In the past, I did NOT have to add the tax into my price (Amazon put the tax on top of the set price). For future, I have to calculate the proper tax if I change my prices. For example, if I decide to put a book on sale, I have know the tax and include it. When I take it off sale, I also must calculate it properly. Either way the tax will be paid, but if I calculate it wrong, I won't be paid what I think I should be paid (because the tax is taken out first).

What does this mean? Well for me, less sales in other countries. It becomes quite complex to calculate back and forth and hope I get it close/right. It's much easier to leave it one price. Of course, indie book prices are already low so the difference between a 2.99 book and a 99 cent sale may not be that big of a deal.

This makes it harder on me, the little guy. Some ad sites REQUIRE a sale to happen before they will allow a publisher to take out an ad. I don't think it affects me as a seller from my own site, but I'll have to check with paypal. I don't currently ask for location because it's an ebook. Hmm. Maybe that is a paypal field for tax reasons. I've never looked.

Bother.

[Ghitulescu]

Originally Posted by jbjb

Really? If you don't approve of the existence of an economy involving companies, what alternative system do you prefer and in what way is it better?

/JB

My point was a different thing. Not the taxation system. Ok, partially.
It is that the end consumer cannot escape taxation, whereas the big companies can and do.

It's not evasion. Evasion will only start when people would consider taxation too aggressive against their own pockets.

Why do not go all British subjects to Luxembourg? I am not sure whether the plane tickets to go to work in London each day would be more expensive than renting a flat there.

[DuckieTigger]

Originally Posted by Ghitulescu

Why do not go all British subjects to Luxembourg? I am not sure whether the plane tickets to go to work in London each day would be more expensive than renting a flat there.

That would be a tight squeeze to fit all of them. The cost of living is not automatically lower only because taxes are lower. It is unclear to me why you are even suggesting such an unrealistic scenario? Traveling long distance for work is expensive not only in time, but money.

[murg]

Originally Posted by fjtorres

That is why attempts at a sales tax on internet sales gets nowhere in the US: it is generally understood that it is a way to prop up legacy businesses at the expense of consumers. And consumers have made it clear they don't want that.

Not to mention that it is prohibited by the Constitution.

[tompe]

Originally Posted by BearMountainBooks

Amazon has sent out emails letting us publishers/writers know about the change. In the past, I did NOT have to add the tax into my price (Amazon put the tax on top of the set price). For future, I have to calculate the proper tax if I change my prices. For example, if I decide to put a book on sale, I have know the tax and include it. When I take it off sale, I also must calculate it properly. Either way the tax will be paid, but if I calculate it wrong, I won't be paid what I think I should be paid (because the tax is taken out first).

What does this mean? Well for me, less sales in other countries. It becomes quite complex to calculate back and forth and hope I get it close/right. It's much easier to leave it one price. Of course, indie book prices are already low so the difference between a 2.99 book and a 99 cent sale may not be that big of a deal.

This makes it harder on me, the little guy. Some ad sites REQUIRE a sale to happen before they will allow a publisher to take out an ad. I don't think it affects me as a seller from my own site, but I'll have to check with paypal. I don't currently ask for location because it's an ebook. Hmm. Maybe that is a paypal field for tax reasons. I've never looked.

Bother.

Why is that the case? Why is not Amazon taking care of adding the correct tax to the price?

[fjtorres]

Originally Posted by tompe

Why is that the case? Why is not Amazon taking care of adding the correct tax to the price?

Because in KDP it is up to the publisher to set the price consumers see. (On those occasions when Amazon sells KDP titles for a lower price--and they aren't price matching--the discount comes off their slice of the cake.) With the new rules, some publishers may want to keep the current list price or set a new EU-wide price and "eat" the tax hike while others may want to keep their take-home constant and let the consumer price vary, country to country.

Remember, before, Amazon had only one VAT rate to add so it made sense to set one price and do a straight currency conversion and add the tax afterwards. Not so simple, now.