Publishing industry faces bleak chapter as VAT threatens survival

SLBPA Secretary Dinesh Kulatunga, SLBPA President Samantha Indeewera, SLPBA Treasurer Athula Jayakody, Publisher Ven. Embilipitiye Vijitha Thero, SL Writer Association Secretary Kamal Perera and Sri Lanka Book Importers and Exporters Association President Pradeep Samaranayake 
Pic by Nisal Badhuge 

• Industry comes on to one platform to urge new government to consider exempting books from taxes in next year’s national budget
• Calls on policymakers to consider the financial and social ramifications of taxing sources of knowledge and learning
• Points out Sri Lanka is the only country in the SAARC region to impose a VAT on books
• Industry witnessing 30% drop in sales

By Nuzla Rizkiya

Sri Lanka’s publishing industry yesterday raised serious concerns over the 18 percent Value Added Tax (VAT) imposed on books, which according to industry stakeholders has threatened the survival of the entire sector in the country.

The tax has caused a ripple effect throughout the entire production value chain—from raw material imports to the point of sale, driving up book prices to levels that are now unaffordable in the local market, the industry said.
In a media briefing, several industry stakeholders came on to one platform to urge the new government to consider exempting books from taxes in next year’s national budget. 

They called on policymakers to consider the financial and social ramifications of taxing sources of knowledge and learning which have the power to shape the future mindsets of the people in the country.

“In book publishing, everything except the labour force is imported. Currently, there are only about 12 large publishing companies eligible to pay VAT on their sales.

“However, many smaller publishers sell their books via the distribution networks of these larger companies which then results in this VAT burden being ultimately absorbed by all stakeholders in the value chain including the consumer,” Sri Lanka Book Publishers Association President Samantha Indeewera said.

He further highlighted that the tax has pushed Sri Lanka to repeatedly violate the UNESCO Florence Agreement of 1950, which prohibits member states from taxing intellectual property.

Building on Indeewera’s remarks, Sri Lanka Book Importers and Exporters Association President Pradeep Samaranayake pointed out that Sri Lanka is the only country in the SAARC region to impose a VAT on books.
He went on to explain that the value added tax is calculated by adding a 10 percent margin to the projected sost, Insurance and Freight (CIF) value of a unit along with a Social Security Levy which results in the industry paying up to 33.045 percent in taxes when importing books. “A survey among our members for 2024 showed a 17 percent  decrease in the sale of freight units compared to the same period in 2023.This drop is largely due to high prices post the crisis, exchange rate fluctuations and this VAT,” Samaranayake said. This impact is further passed on to booksellers across the country, which has put the jobs of nearly 10,000 people at risk, according to the All Ceylon Booksellers Association.

Speaking to Mirror Business, the association’s secretary Manura Wanniachchi shared that the local industry has reached a point where large-scale producers are struggling to retain employees, increase salaries or pursue new investments due to heavy tax burdens.

“Sales dropped drastically by 50 percent after Covid. Now, we are observing a 30 percent reduction in the remaining sales after the introduction of this VAT. Our projections also say that the probability of a book not being sold is about 60 percent. So this is a very difficult environment for us to survive in,” Wanniachchi said.