I have a strong sense of deja vu on this current discussion. The question of
VAT on electronic services as regards academic institutions seems to have
been rumbling on for some time, certainly since CD-ROMs arrived. However
many publishers worked out a combined package price with the print version
that resulted in a composite rate of VAT that was such a small increment on
the print price that no-one really seemed to be too worried.
The issue started to gain much more attention when I was working as a member
of the Evaluation Team for the Pilot Site Licence Initiative, under the
direction of John Fielden at CHEMS. Some universities had had discussions
with their local VAT inspector, which in at least one case resulted in two
institutions in the same city taking a different view on how to reclaim VAT
because they each had a different VAT Inspector. We raised the issue of VAT
in the report of the Evaluation Team, and specifically referred to the
problem of the impact this would have on budgets if the 17.5% VAT could not
be reclaimed. In presenting this conclusion to a UKSG meeting in November
1997 I was taken on one side by a distinguished university librarian and
told that I had overstated the problem because there were never going to be
any electronic-only journals!
To add to the comments from David Ball, the composite VAT rate issue is more
complex than might seem. Where there is a combined print/electronic
subscription the element of the use of the electronic version has to be
taken into account. If the print version is just kept as a long-term
archive and the primary use is of the electronic version then Customs and
Excise may take some convincing that the composite rate should be nearer 0%
than 17.5%
Going back to the discussions within the PSLI project, a publisher may take
the view of their VAT Inspector and/or finance director, but as I understood
it, this is not binding on the VAT Inspector at the purchaser's end, but I
am happy to be corrected on this viewpoint.
The VAT situation does need some skilled and urgent attention paid to it
given the current differences of opinion between the USA and the EU about
taxation on e-commerce.
Martin White, Managing Director, Intranet Focus Ltd
12 Allcard Close, Horsham, West Sussex, RH12 5AJ
Tel. 01403 267030 http://www.intranetfocus.com
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