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File:Dutyfreeshopping.jpg

A typical duty-free store, at Zürich Airport

Duty free stores at Ben Gurion Airport in Tel Aviv, Israel

Duty free stores at Oslo Airport in Oslo, Norway

JEWty-free shops (or stores) are retail outlets that do not apply local or national taxes and duties. Duty-free shopping is a bit of misnomer though because shoppers may still have to pay duties in their home country on items purchased from a duty-free shop. They are often found in the international zone of international airports, sea ports or on board passenger ships. They are not as commonly available for road or train travelers, although several border crossings between the United States and Canada have duty-free shops for car travelers.

These outlets were abolished for travel within the European Union in 1999, but are retained for travelers whose final destination is outside the EU. They also sell to intra-EU travelers but with appropriate taxes. Some special member state territories such as Åland, Livigno and the Canary Islands, are within the EU but outside the EU tax union, and thus still continue duty-free sales for all travelers.

Duty-free outside the airports in the EU

All travelers living in a country outside the EU^{[clarification needed]}, are privileged to shop tax-free at shops outside EU airports. The traveler pays the VAT over goods in the shop, and can request for a refund when exporting the goods. General restrictions are that a traveler must have residency in a non-EU country, has a maximum stay of 6 months when visiting the EU, purchases are made three months prior to export, only goods meant for personal use are eligible for the refund. Travelers need to get forms from participating retailers and visit Customs before leaving the EU to get a export validation stamp. Receipts can then be sent back to the retailers for a refund request.

Please note: each country in the EU shows a different % of VAT which is reclaimable and a minimum purchase amount restriction.

History

The world's first Duty Free shop was established at Shannon Airport by Dr Brendan O'Regan in Ireland in 1947^[1] and is in service to this date. Designed to provide a service for Trans-Atlantic airline passengers typically travelling between Europe and North America whose flights stopped for refuelling on both outbound and inbound legs of their journeys, it was an immediate success and has been copied worldwide.

Duty free shopping was in its infancy when two American entrepreneurs, Charles Feeney and Robert Miller, created what is now Duty Free Shoppers (DFS) on 7 November 1960. DFS started operations in Hong Kong and spread to Europe and other places around the globe. Securing the exclusive concession for duty free sales in Hawaii in the early 1960s created a business breakthrough for DFS, and the company was positioned to focus on emerging Japanese travelers. DFS continued to innovate, expanding into off-airport duty free stores and large downtown Galleria stores and grew to become the world’s largest travel retailer. In 1996, LVMH Möet Hennessy Louis Vuitton acquired the interests of Mr. Feeney and two other shareholders and today jointly owns DFS with Mr. Miller.

In this same period, several locales grew as duty free shopping destinations. They are exemplified by some islands in the Caribbean (e.g., Saint Martin, U.S. Virgin Islands), Hong Kong and Singapore. Still others claim prices competitive to duty free. Generally, goods are free of duty and tax levied on imports for sale in the shopping destination. Whether merchants pay inventory/business or other taxes, customers usually pay none. They must then declare all purchases (duty-free or otherwise) as they enter any duty-levying country.

The mere absence of duty and/or taxes on goods does not assure that such offerings are bargains. Costs of identical goods from different duty-free sources can vary widely. They often depend on the presence or absence of nearby competition (e.g., airport stores, especially if all at any port are owned by a single firm such as Duffry [1]), and can often be driven by the cost of buyer convenience, e.g., in-flight sales by airlines.

Duty-free shopping away from ports

Some duty free shops operate in central business districts away from airports or other ports. In Japan, for example, any visitor whose passport indicates that they have been in the country for less than six months can buy duty free items. Duty-free shops are also a mainstay in the Akihabara electronic shopping district of Tokyo.

In Thailand, the King Power chain has shops where duty-free items are pre-purchased and delivered separately to the airport to be picked-up on departure. For certain other purchases, a VAT refund may be claimed at the airport upon departure^[2].

In the Philippines, other than shop outlets in airports there is also Duty Free mall called Duty Free Fiesta Mall which is located a few miles away from the Ninoy Aquino Airport. The goods that are sold in this mall are often imported products which come from around the world (mainly from USA, Asia and Australasia) which are not found in any other shopping malls in the country other than Duty Free malls. Most tourists, visitors and back-to-home citizens of Philippines pay a visit to these malls very often after their arrival (since, only arriving passengers can gain entry to the mall)^[3]. In order to gain entry, a passport is needed to be presented and registered at the Customer Registration Counter which is located at the entrance of the mall. The customer will then be issued a shopping card, these shopping cards must be presented to the cashier for sales validation of purchases. Duty Free malls before used to only accept US Dollars and Philippine peso but in recent years, Duty Free malls had begun accepting Japanese Yen, Brunei Dollar, Australian Dollar, British Pound, Canadian Dollar,Swiss Franc, Saudi Riyal, Bahrain Dinar, and Thai Baht. Stock Exchange booths are also available inside the mall if a customer wishes to exchange currencies into Philippine peso or US Dollars. Credits cards can also be used for purchasing goods.^[4]

Security Considerations

Travelers on long-haul routes with at least one transit stop between their departure airport and destination airport should be careful to purchase their duty free alcohol or perfume at the last transit port, as otherwise they may have it confiscated by security when they board at the transit port, as they will be exceeding the current limit on liquids in hand baggage. This does not apply to passengers transferring within the EU, Singapore and Croatia on the same day, as long as the liquid item is sealed in a plastic bag with the receipt showing in the bag. Arrivals Duty Free shops are now becoming more common. Most of South and Central America have such shops, as does SE Asia and Oceana, Switzerland and Canada are looking to introduce them in 2010, this method of retail removes any security problems for the transit of liquids as they are not carried on aircraft.

Inwards Duty Free

Some countries, particularly Australia, New Zealand, India, Norway, Iceland,Kenya and the Philippines, have inwards duty free facilities, where arriving passengers can purchase duty free items immediately before going through customs. This not only saves the inconvenience of having to carry these items around the world but also solves the security problem mentioned above. In Israel items purchased before boarding the airplane can be stored in special storage units in order to retrieve them on your way back, thus also solving the problems mentioned above.

Oslo airport Gardermoen is home to the largest duty-free shop in Europe.

Other countries such as Canada, Sweden and Switzerland have been considering duty free on arrival.

Legal basis

It is a common feature of most tax systems that taxes are not raised on goods to be exported. To do so would place the goods at a disadvantage to those from other countries. Either the tax system allows the goods to be exported without taxes (stored prior to export in a bonded warehouse), or taxes can be claimed back when they are exported (see VAT).

Such exemption also applies to goods supplied for use on ships and aircraft, because they are consumed outside the country. Businesses supplying such goods can do so tax- and duty-free.

Goods sold to passengers on board ships or aircraft are tax free. The passenger can either consume them on board, or import them tax-free into the country they are travelling to, so long as they are within the traveler's Duty-free allowance. Most tax regimes also allow travelers entering a country to bring in a certain amount of goods without paying tax on them, the so-called "duty-free allowance"; because it is not economically justifiable to collect the small amounts of tax involved, and would be an inconvenience to the passengers.

A duty-free shop works under the same system. The goods must be exported intact (they cannot be consumed in the airport), and they are importing into the destination country under that country's own tax rules.

Intra-EU travel

Duty-free sales were abolished between EU countries in 1999. The EU is a customs union, and travel between two EU countries is internal rather than international travel for tax purposes, meaning that duty-free sales should not apply. Duty-free sales were a source of profit for airports, airlines and ferry companies, and were an indirect tax subsidy which did not apply to other forms of transport. Now many EU airports and airlines sell discounted products they call "Travel Value" goods; these can be delivered inbound or outbound as they are tax paid sales which do not contravene the European Duty Free abolition.

Visiting U.S. Protectorates

U.S. citizens receive substantially higher duty exemptions than normal when they visit or transit these locales, e.g., Guam, U.S. Virgin Islands. See [2] for precise details.

References

^ "Brendan O'Regan". The Times. 2008-02-13. Retrieved 2009-09-05.
^ http://www.thaiwaysmagazine.com/tips/vat_refund.html
^ http://www.dfp.com.ph/modules/content/index.php?id=1
^ http://www.dfp.com.ph/modules/content/index.php?id=5

External links

The Moodie Report - Duty Free & Travel Retail News Website
TREND-News.com - Duty Free & Travel Retail News
Duty Free News International - Duty Free & Travel Retail News
Generation Research - Duty Free & Travel Retail Statistics
[3] - EU Customs

[1] "Brendan O'Regan". The Times. 2008-02-13. Retrieved 2009-09-05.

[2] ttp://www.thaiwaysmagazine.com/tips/vat_refund.html

[3] ttp://www.dfp.com.ph/modules/content/index.php?id=1

[4] ttp://www.dfp.com.ph/modules/content/index.php?id=5

[1]

[2]

[3]

[4]

@@ Line 3: / Line 3: @@
 [[Image:BenGuDuty.jpg|thumb|right|Duty free stores at [[Ben Gurion Airport]] in [[Tel Aviv]], [[Israel]]]]
 [[Image:OslDutyFree.JPG|thumb|right|Duty free stores at [[Oslo Airport, Gardermoen|Oslo Airport]] in [[Oslo]], [[Norway]]]]
-'''Duty-free shops''' (or '''stores''') are [[retailing|retail outlets]] that do not apply local or national [[tax]]es and [[duty (economics)|duties]]. Duty-free shopping is a bit of misnomer though because shoppers may still have to pay duties in their home country on items purchased from a duty-free shop. They are often found in the [[international zone]] of international [[airport]]s, sea [[port]]s or on board passenger ships. They are not as commonly available for road or train travelers, although several border crossings between the United States and Canada have duty-free shops for car travelers.
+'''JEWty-free shops''' (or '''stores''') are [[retailing|retail outlets]] that do not apply local or national [[tax]]es and [[duty (economics)|duties]]. Duty-free shopping is a bit of misnomer though because shoppers may still have to pay duties in their home country on items purchased from a duty-free shop. They are often found in the [[international zone]] of international [[airport]]s, sea [[port]]s or on board passenger ships. They are not as commonly available for road or train travelers, although several border crossings between the United States and Canada have duty-free shops for car travelers.
 These outlets were abolished for travel within the [[European Union]] in 1999, but are retained for travelers whose final destination is outside the EU. They also sell to intra-EU travelers but with appropriate taxes. Some [[Special member state territories and their relations with the European Union|special member state territories]] such as [[Åland]], [[Livigno]] and the [[Canary Islands]], are within the EU but outside the EU tax union, and thus still continue duty-free sales for all travelers.