Make all books GST-exempt to avoid confusion, say publishers

Putrajaya should exempt all types of books from the Goods and Services Tax (GST) instead of limiting the zero-rating to only a few categories, publishers said, as they remain in the dark about the mechanics of the consumption tax on their businesses.

Applying the tax to only certain categories of books was confusing, they said, because the materials used in publishing were not zero-rated and also because of the many types of books published.

Malaysia Book Publishers Association (Mabopa) said they were still unclear as to how GST at 6% would be applied to books when the tax is implemented from April 1 this year.

"We are having a hard time with everything being a blur, even with explanations from the Customs Department. It had not been of much help," Mabopa secretary Arief Hakim Sani Rahmat told The Malaysian Insider.

Arief, who is the managing director of PTS Publication & Distributors Sdn Bhd, said the GST was now a little more than two months away but until now, the industry was still debating the best way to impose the tax on books because of the variety of book categories.

"This mixed status is very hard because it is so complex and you need a clear method to implement it," he said, adding that publishers were feeling anxious over the situation.

Reading materials are categorised as zero-rated but this is only limited to some types of books like children's colouring books, exercise books, text books, dictionaries, religious scriptures and newspapers, according to the Customs Department's list.

These categories of zero-rated publications were also announced by Prime Minister Datuk Seri Najib Razak when tabling the national budget for 2015 in October last year.

However, ink and paper, the main materials to produce books, are standard-rated, or taxable items under GST.

This has raised questions whether consumers will have to pay more for books, including the zero-GST ones, Arief said, but added that people might not have to wait for the GST to be implemented before seeing price hikes for books.

"The fall of the ringgit is also affecting our book industry. When the ringgit drops, paper becomes more expensive. Paper is already more expensive now because it is a commodity," he said.

Arief urged Putrajaya to listen to publishers' appeal to have all types of books zero-rated because the government had a social responsibility in delivering and promoting education. "We are not fighting the GST but it is more appropriate to make all books zero-GST.

"We have been quite surprised with the decision because ink and paper used to be exempted from the Sales and Services Tax (SST).

"For that reason, it is the government's social responsibility not to impose GST on books," he said.

The situation is also affecting those in the alternative books business, a group that may even be the worst hit by the GST.

Alternative or independent book publishers mainly produce and sell books worth not more than RM50,000 a year, the threshold at which they must register with the Customs Department.

Neon Terbit owner, Firdaus Abdillah Hamzah, said the status of a small-time publisher was the same as book buyers.

"If book buyers feel affected, then small-time publishers feel the same too," said the man who has yet to get ready for the implementation of the GST. Firdaus, like the others, is also questioning why not all books are zero-GST.

He said the authorities have failed to explain the new tax to its target groups. "We see the commercial on television about the GST, but that is not enough to help us understand the tax," he said.

Independent book publisher, Dubook Press, however, has decided that the company will not impose the GST on the books it sells.

Company chief executive officer Mutalib Uthman said they would strive not to burden their customers and would look for the most effective way to avoid imposing GST on consumers, without having to lose too much profit.

The company will try to increase book sales by selling directly to readers, he said. "Usually publishers bear higher costs because the middle men take more than half of the profits we make.

"So we are confident that without middle men, we will be able to absorb the cost while selling directly to our readers and not impose GST," he said.

Prior to this, Lembah Pantai MP Nurul Izzah Anwar had also slammed Putrajaya for exempting only certain types of books from the GST.

She said a survey by the International Publishers Association, which looked at value-added GST regimes, had found that out of 51 countries surveyed, 47 had special discounts and exemptions on printed books.

The report also said despite the global economic crisis and the subsequent VAT-GST reforms in many countries, books were consistently confirmed to be among the goods and services that merited a special, reduced VAT-GST rate or exemption. – January 30, 2015.