15-09-2008

No tax breaks for cinema tickets

Written by Martin Aadamsoo
The Estonian government last week dashed hopes of reducing the 18% VAT tax on cinema tickets to 5% in its efforts to put together a balanced state budget for the next year.

The decision now needs the approval of the parliament, which is expected.

The state courts had previously ruled as unconstitutional the system whereby organisations with government financing will only need to collect 5% VAT on theatre and concert tickets sold, as opposed to 18% for commercial organisations. Following the court ruling, several organisations, including the creative industries unions, had been pushing for a uniform reduced rate of 5% for all culture related sales. This now appers doomed, as the country's economy faces recession.

The European Union allows for breaks on VAT rates for several cultural goods, such as books and tickets. This is applied widely by most European countries. Estonia now edges away from the European standard, with almost no tax exemptions on cultral goods.