Donohoe warned plan to remove VAT from newspapers only would cause 'serious problems'

Ken Foxe

Former minister for finance Paschal Donohoe was warned there was likely to be “significant drafting challenges” in a plan to remove VAT charges from newspapers.

In a submission, officials said they were concerned they could run into “serious problems” in determining what type of newspapers, magazines, or periodicals should be included.

Mr Donohoe was told that a move to remove VAT from only newspapers and news-oriented periodicals would cost an estimated €39 million.

However, an option to extend the VAT abolition to other titles covering sport, entertainment, fashion, health, computers, and such like would add a further €21 million to the bill.

A pre-budget submission said: “Revenue has advised that there are likely to be significant drafting challenges, if we confine the zero rate to newspapers and other periodicals.

“It may be argued that any periodical that carries any item of news will be argued to be a ‘News Periodical' and thus come within the scope of the zero rate of VAT.”

In a note on the submission, a special adviser confirmed the minister only wished to move forward with the €39 million plan for zero VAT rating for newspapers and news periodicals.

This came despite warnings from officials over the likelihood of challenges in determining “what products are in and what are out”.

The submission said: “If you exclude other periodicals from the zero rate, this may lead to drafting challenges.

“However, if this is your preference we could monitor the drafting process and update you accordingly, if we are running into serious problems trying to determine what products are in and what are out.”

The pre-budget submission explained how the Future of Media Commission had recommended a review of potential tax measures that could support public service content providers.

In a submission, the newspaper industry had said it was facing “many challenges” and despite larger audiences than ever, their revenue model was “hugely challenged”.

The pre-budget document said: “[The industry] say that monetising their content is a key challenge for news publishers, while large online platforms utilise that content to obtain the attention of consumers and sell some of that attention, through other products and services, to their customers.

“In the process, these platforms also absorb a disproportionate share of digital advertising revenue, 85 per cent in the case of Ireland.”

The newspaper industry said a zero VAT rating would give them financial leverage to ensure citizens had access to “fact-checked, trusted journalism” and signal government support for the importance of quality journalism.