Value Added Tax. VAT. Doesn’t sound too ominous does it?
VAT is the second most important source of revenue for the South African Fiscus. What we are looking at in lay man’s terms, are the selling and buying of services via the internet. An author provides a service, so why are some countries exempted from VAT and others not so much? I shall elaborate.
With the advancement of technology. Many goods and services are available over the internet, including the selling and publishing of books, be it a printed novel or an eBook, as an example.
Authors benefit due to being able to communicate directly with their publishers, sending a manuscript has never been this easy. There is a slight price to pay, it’s called VAT. Facing a global pandemic has seen a rise in taxes, or VAT if I may. I can recall the days when VAT was a mere 10%, then it increased to 14%, currently, VAT is a whopping 15%.
VAT is the building block which keeps our GDP and infrastructure for crumbling. After the looting and riots in South Africa, our Government had to come up with a viable solution, as how to rebuild what had been destroyed over a span of a few weeks. Directly and indirectly we have all been affected in some way. With the pandemic looming over the world, increasing taxation was a feasible solution, leaving most authors scratching their heads. (Why should an author, self-published author or freelance writer pay tax?)
THE IMPORTANCE OF ‘FISCUS’
As I stated in the beginning, VAT plays a crucial role in South African Fiscus. What does Fiscus mean and why is it so important?
Fiscus is derived from the English term, ‘Fiscal’. Fiscal was the name of the personal treasury of the emperor of Rome. This term means ‘basket’ or ‘purse’.to simplify, money held in Fiscus in modern-day are held in a trust by a Governor or a Mayor. Subsequently as an initiative to help the less fortunate. (A very lucrative piggy-bank)
As we debate VAT, one can now have a clearer understanding why we pay taxes on our books, to publishers, websites and even blogs, to promote our books. That’s the gist of it all. We want our books to be read world-wide, we seek recognition for our labour. VAT is the key.
As much as applying for an income tax number can be stressful, there are those in the know ready to advice and help.
Taxes per-say, are a means to stabilize the economy. When we heard the acronym SARS, the hair on the back of our necks stands on end. I am here to assure you; it’s serves a purpose. I am no expert, however there’s a valid reason why we pay taxes.
Self-employment taxes are allocated to self-published books, its necessary to cover business cost as an example. The term, nothing comes for free is quite relevant in this regard.
The first account of taxation dates back to Egypt, the year 3000 BC, my point is. VAT and taxes have been around since the dawn of time. As sure as the sun shines, even on a cloudy day. It will be around for the duration of time. VAT has prevailed, and strengthened as the World faced its worst calamities. In our current pandemic, VAT is a necessary ‘evil.’
As much as paying taxes can be rather overwhelming, there’s light at the end of this tunnel. Tax-return. Allow me to simplify, if the income tax was greater than an individual’s income tax for the year, said individual will receive a refund for the difference. All that’s required, is to submit a tax return application.
Concession on our books, are a preferential allowance given by an organization or a business in this regard. Once again I shall simply, it’s a compromise. The reward of paying VAT or taxes on your eBooks, self-published books etc. Enables the government to sublimate the decline in economic infrastructure during a global pandemic.
VAT and taxes aren’t mandatory nor implemented so rich folks can own yachts or super-cars. On the contrary. Paying VAT on your books are beneficial to each and every one of us in the long run, or term if I may. We pay VAT on our books to provide a service to our publishers, their team of editors and such. No longer look at VAT as the enemy. It basically works behind the scenes so an author, aspiring author or writers can apply their trade world-wide.
VAT: THE PARADOXICAL ALLAY
Why is VAT beneficial? I shall quote Oliver Wendel Holmes. “Taxes are the price we pay for civilization.”
Taxes, VAT. Call it what you may, keeps our homes and streets safe. One often hears in films, “The taxpayers’ money goes to the public servants, for example our Police department and military.”
Even the fellows that collect your rubbish every week, benefit from the taxes and VAT we pay, albeit it might be to publish or distribute your books.
In the past, taxes and VAT, were curtail in the building of schools, hospitals, courts of law, and assisting in public transport. In South Africa, public transport is crucial to anyone who doesn’t own a car. (Food for thought)
The public sector works hard to provide the services we need, money begets power, taxes and Vat, will get you; published. Our publishers are often forgotten, undervalued or taken for granted. Whilst you sleep in your bed they are hard at work, editing and getting your book ready to be published. I shall state paying VAT to these individuals, businesses or entrepreneurs should not be a burden.
Taxes and VAT allows a citizen to live, work and play. The next time you pay tax on your book, give a thought to your publisher whom works diligently and relentlessly to get your book to the top, which is no easy feat.
The Oxford dictionary, describes tax as money people or businesses, which include publishers, have to pay to the government, to be used for public purpose. We the authors are the public, the citizens of our country. Paying VAT, enables you to receive revenue from your books. VAT is the basis we use to continue publishing our work, as a matter of fact. VAT, assures an author, that he or she will be compensated for their hard work and dedication.
As a self-employed author, register as a provisional taxpayer. To simplify, you will then pay taxes based on your income for the first 6 months, thereafter for the next 6 months, easier to keep track of your finances.
To conclude: In countries with VAT exemption, VAT becomes part of the production cost. (One cannot claim a VAT refund)
In the EU (European Union), approximately 92.6%, countries apply for special VAT treatment for printed books, with a reduced rate of 7.4% reduction. Due to VAT exemption, the price of a printed book is automatically increased.
In South Arica, the VAT rate is currently 15%, which includes the selling price of a book. When buying online, calculate the exchange rate and freight costs to your country.
To deviate slightly. Amazon originally paid an author with a cheque. Receiving the cheque is not a promising commodity. To make things simpler, open up a Payoneer account. Using Payoneer will include a bank card. (Wait a few weeks for the card to arrive). This card will allow you to withdraw your funds from an ATM, even if it’s not liked to your bank.
[Update: Amazon will now pay authors from South Africa directly in our local bank accounts.]
I have used many resources and those in the know to write this article. One is my daughter Giselle, whom has a degree in accounting from UNISA. Giselle worked in a Tax firm on her arrival in Canada. I might add that VAT and taxes are by far more strenuous in Canada.
Not to be repetitive, VAT is not an enemy. It’s ensures that your books are published and distributed world-wide. Technology has been a gift. VAT INSURES THAT YOUR BOOKS ARE AVAILABLE ON ANY DEVICE OF YOUR CHOOSING. As a matter of fact, allows you as an author to interact with your readers in any part of the world. You have the power, the means and a team that will guide you step by step, as to how you can keep track of your books, sales and at times the amount of VAT paid to make your dream come true.
Thanks for the article go to talented author Nikki Paiva. Find her most recent titles on Amazon over here.