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A duty-free shop (or store) is a
retail outlet Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and t ...
whose goods are exempt from the payment of certain local or national
tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...
es and
duties A duty (from "due" meaning "that which is owing"; fro, deu, did, past participle of ''devoir''; la, debere, debitum, whence "debt") is a commitment or expectation to perform some action in general or if certain circumstances arise. A duty may ...
, on the requirement that the goods sold will be sold to travelers who will take them out of the country, who will then pay duties and taxes in their destination country (depending on its personal exemption limits and tariff regime). Which products can be sold duty-free vary by jurisdiction, as well as how they can be sold, and the process of calculating the duty or refunding the duty component. Tax Free World Association (TFWA) announced that in 2011
Asia-Pacific Asia-Pacific (APAC) is the part of the world near the western Pacific Ocean. The Asia-Pacific region varies in area depending on context, but it generally includes East Asia, Russian Far East, South Asia, Southeast Asia, Australia and Pacific Isla ...
, with 35 percent of global duty-free and travel retail sales, has more duty free than Europe and Americas, with these regions accounting for 34 percent and 23 percent respectively. 31 percent of sales came from the fragrances and cosmetics category, followed by the wine and spirit category with 17 percent and then comes tobacco products. However, some countries impose duty on goods brought into the country, though they had been bought duty-free in another country, or when the value or quantity of such goods exceed an allowed limit. Duty-free shops are often found in the
international zone An international zone is any area not fully subject to the border control policies of the state in which it is located. There are several types of international zones ranging from special economic zones and sterile zones at ports of entry exe ...
of international
airport An airport is an aerodrome with extended facilities, mostly for commercial air transport. Airports usually consists of a landing area, which comprises an aerially accessible open space including at least one operationally active surface ...
s, sea
port A port is a maritime facility comprising one or more wharves or loading areas, where ships load and discharge cargo and passengers. Although usually situated on a sea coast or estuary, ports can also be found far inland, such as Ham ...
s, and
train station A train station, railway station, railroad station or depot is a railway facility where trains stop to load or unload passengers, freight or both. It generally consists of at least one platform, one track and a station building providing suc ...
s but goods can also be bought duty-free on board airplanes and passenger ships. They are not as commonly available for road or train travelers, although several border crossings between the United States and both Canada and Mexico have duty-free shops for car travelers. In some countries, any shop can participate in a reimbursement system, such as ''Global Blue'' and ''
Premier Tax Free Planet (formerly known as Fintrax and Premier Tax Free), is a financial services company, specialised in multicurrency payments, credit card processing and the management of VAT refunds for tourists. Planet provide their services to overseas vi ...
'', wherein a sum equivalent to the tax is paid, but then the goods are presented to customs and the sum reimbursed on exit. Duty-free are abolished for intra- EU (inside the EU tax union) travelers but are retained for travelers whose final destination is outside the EU. They also sell to intra-EU travelers but with appropriate taxes. The world's largest airport by duty-free sales is South Korea's
Incheon Airport Incheon International Airport (IIA; ) (sometimes referred to as Seoul–Incheon International Airport) is the largest airport in South Korea. It is the primary airport serving the Seoul Capital Area and one of the largest and busiest airports ...
, with US$1.85 billion in 2016, narrowly overtaking
Dubai Duty Free Dubai Duty Free (DDF) is the company responsible for the duty-free operations at Dubai International Airport and Al Maktoum International Airport. Founded in December 1983, DDF recorded first-year sales of US$20 million and has grown into one ...
with 2016 sales of $1.82 billion.


History


1947-1990: duty free establishment

Brendan O'Regan Brendan O'Regan CBE (1917–2008) was an Irish businessman responsible for developing Shannon Airport, inventing the concept of the duty-free shop and transforming the Shannon Region of Ireland. He was involved in promoting peace in Northern Irel ...
established the world's first duty-free shop at
Shannon Airport Shannon Airport ( ga, Aerfort na Sionainne) is an international airport located in County Clare in the Republic of Ireland. It is adjacent to the Shannon Estuary and lies halfway between Ennis and Limerick. The airport is the third busiest ai ...
in Ireland in 1947; it remains in operation today. Designed to provide a service for trans-Atlantic airline passengers typically travelling between Europe and North America whose flights stopped for refuelling on outbound and inbound legs of their journeys, it was an immediate success and has been copied worldwide. Thirteen years later, two American entrepreneurs,
Charles Feeney Charles Francis Feeney (born April 23, 1931) is an Irish-American businessman and philanthropist who made his fortune as a co-founder of the Hong Kong based Duty Free Shoppers Group. He is the founder of The Atlantic Philanthropies, one of the ...
and
Robert Warren Miller Robert Warren Miller (born May 23, 1933) is an American billionaire, entrepreneur, co-founder of DFS (Duty Free Shops), and sailing champion. He is the father of Crown Princess Marie-Chantal of Greece, Princess Alexandra von Fürstenberg, and ...
, founded 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 was a commercial breakthrough for DFS, which enabled the company to focus on Japanese travelers. DFS continued to innovate, expanding into off-airport duty-free stores and into large downtown Galleria stores; it grew to become the world's largest
travel retailer Travel is the movement of people between distant geographical locations. Travel can be done by foot, bicycle, automobile, train, boat, bus, airplane, ship or other means, with or without luggage, and can be one way or round trip. Travel c ...
. In 1996
LVMH LVMH Moët Hennessy Louis Vuitton (), commonly known as LVMH, is a French holding multinational corporation and conglomerate specializing in luxury goods, headquartered in Paris. The company was formed in 1987 through the merger of fashion house ...
Moët Hennessy Louis Vuitton acquired the interests of Feeney and two other shareholders and jointly owned DFS with Miller. In this same period, several locales grew as duty-free shopping destinations. They are exemplified by Saint Martin and the US Virgin Islands in the Caribbean, 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 anywhere in the shopping destination. Merchants may pay inventory/business or other taxes, but their customers usually pay none directly. The mere absence of duty or other taxes on goods being sold does not assure that they 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 airport are owned by a single firm such as Dufry. Also, prices can often be driven upward by the costs of buyer convenience, e.g., in-flight sales by airlines. Many airlines, such as
Emirates Emirates may refer to: * United Arab Emirates, a Middle Eastern country * Emirate, any territory ruled by an emir ** Gulf emirates, emirates located on the Persian Gulf ** Emirates of the United Arab Emirates, the individual emirates * The Emirat ...
,
El Al El Al Israel Airlines Ltd. (, he, אל על נתיבי אויר לישראל בע״מ), trading as El Al (Hebrew: , "Upwards", "To the Skies" or "Skywards", stylized as ELAL; ar, إل-عال), is the flag carrier of Israel. Since its inaugural ...
,
Singapore Airlines Singapore Airlines (abbreviation: SIA) is the flag carrier airline of the Republic of Singapore with its Airline hub, hub located at Singapore Changi Airport. The airline is notable for highlighting the Singapore Girl as its central figure in ...
,
Middle East Airlines Middle East Airlines – Air Liban S.A.L. ( ar, طيران الشرق الأوسط ـ الخطوط الجوية اللبنانية ''Ṭayyarān al-Sharq al-Awsaṭ – al-Khuṭūṭ al-jawiyyah al-lubnāniyyah''), more commonly known as Middle ...
,
Ukraine International Airlines Ukraine International Airlines PJSC, often shortened to UIA ( uk, Авіакомпанія Міжнародні Авіалінії України, Aviakompaniya Mizhnarodni Avialiniyi Ukrayiny, ), is the flag carrier and the largest airline of ...
,
Delta Delta commonly refers to: * Delta (letter) (Δ or δ), a letter of the Greek alphabet * River delta, at a river mouth * D ( NATO phonetic alphabet: "Delta") * Delta Air Lines, US * Delta variant of SARS-CoV-2 that causes COVID-19 Delta may also ...
, and
Avianca Avianca S.A. (acronym in Spanish for ''Aerovias del Continente Americano S.A.'', "Airways of the American Continent") is a Colombian airline. It has been the flag carrier of Colombia since December 5, 1919, when it was initially registered under ...
, offer duty-free sales on their flights.


1991-2021: EU duty free changes

In 1991, the EU decided to keep some duty free for a transition period until 1999. In 1999, after the creation of the European Union, the single market and the monetary union, these outlets were abolished for intra- EU travellers 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 Åland ( fi, Ahvenanmaa: ; ; ) is an Federacy, autonomous and Demilitarized zone, demilitarised region of Finland since 1920 by a decision of the League of Nations. It is the smallest region of Finland by area and population, with a size of 1 ...
,
Livigno Livigno (; local lmo, Livígn ; german: Luwin) is a town, ''comune'' and a special-administered territory in the province of Sondrio, in the region of Lombardy, Italy, located in the Italian Alps, near the Swiss border. History Livigno's firs ...
and the
Canary Islands The Canary Islands (; es, Canarias, ), also known informally as the Canaries, are a Spanish autonomous community and archipelago in the Atlantic Ocean, in Macaronesia. At their closest point to the African mainland, they are west of Morocc ...
, are within the EU but outside the EU tax union, and thus still continue duty-free sales for all travelers. In 2021, with
Brexit Brexit (; a portmanteau of "British exit") was the withdrawal of the United Kingdom (UK) from the European Union (EU) at 23:00 GMT on 31 January 2020 (00:00 1 February 2020 CET).The UK also left the European Atomic Energy Community (EAEC or ...
duty free are reintroduced in three
British nations British may refer to: Peoples, culture, and language * British people, nationals or natives of the United Kingdom, British Overseas Territories, and Crown Dependencies. ** Britishness, the British identity and common culture * British English, ...
:
England England is a country that is part of the United Kingdom. It shares land borders with Wales to its west and Scotland to its north. The Irish Sea lies northwest and the Celtic Sea to the southwest. It is separated from continental Europe b ...
,
Wales Wales ( cy, Cymru ) is a Countries of the United Kingdom, country that is part of the United Kingdom. It is bordered by England to the Wales–England border, east, the Irish Sea to the north and west, the Celtic Sea to the south west and the ...
and
Scotland Scotland (, ) is a country that is part of the United Kingdom. Covering the northern third of the island of Great Britain, mainland Scotland has a border with England to the southeast and is otherwise surrounded by the Atlantic Ocean to the ...
. This allows reduced taxes on
wine Wine is an alcoholic drink typically made from fermented grapes. Yeast consumes the sugar in the grapes and converts it to ethanol and carbon dioxide, releasing heat in the process. Different varieties of grapes and strains of yeasts are m ...
,
Champagne Champagne (, ) is a sparkling wine originated and produced in the Champagne wine region of France under the rules of the appellation, that demand specific vineyard practices, sourcing of grapes exclusively from designated places within it, spe ...
or
Prosecco Prosecco (; Italian: ) is an Italian DOC or DOCG white wine produced in a large area spanning nine provinces in the Veneto and Friuli Venezia Giulia regions, and named after the village of Prosecco which is in the province of Trieste, Italy. It ...
,
beer Beer is one of the oldest and the most widely consumed type of alcoholic drink in the world, and the third most popular drink overall after water and tea. It is produced by the brewing and fermentation of starches, mainly derived from ce ...
and
spirits Spirit or spirits may refer to: Liquor and other volatile liquids * Spirits, a.k.a. liquor, distilled alcoholic drinks * Spirit or tincture, an extract of plant or animal material dissolved in ethanol * Volatile (especially flammable) liquids, ...
as well as on
cigarette A cigarette is a narrow cylinder containing a combustible material, typically tobacco, that is rolled into thin paper for smoking. The cigarette is ignited at one end, causing it to smolder; the resulting smoke is orally inhaled via the opp ...
s,
cigarillo A cigarillo (from Spanish ''cigarrillo'', meaning "cigarette", in turn from ''cigarro'' ("cigar") + ''-illo'' (diminutive suffix), pronounced in parts of Latin America or in Spain) is a short, narrow cigar. Unlike cigarettes, cigarillos are wra ...
s,
cigar A cigar is a rolled bundle of dried and fermented tobacco leaves made to be smoked. Cigars are produced in a variety of sizes and shapes. Since the 20th century, almost all cigars are made of three distinct components: the filler, the binder l ...
s, or
tobacco Tobacco is the common name of several plants in the genus '' Nicotiana'' of the family Solanaceae, and the general term for any product prepared from the cured leaves of these plants. More than 70 species of tobacco are known, but the ...
.


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 items without paying consumption tax, so long as the total purchase value exceeds ¥5,000 and the items will not be consumed in Japan. Duty-free shops are a mainstay in the
Akihabara is a common name for the area around Akihabara Station in the Chiyoda ward of Tokyo, Japan. Administratively, the area called Akihabara mainly belongs to the and Kanda-Sakumachō districts in Chiyoda. There exists an administrative district ca ...
electronic shopping district of
Tokyo Tokyo (; ja, 東京, , ), officially the Tokyo Metropolis ( ja, 東京都, label=none, ), is the capital and largest city of Japan. Formerly known as Edo, its metropolitan area () is the most populous in the world, with an estimated 37.468 ...
. In Thailand, the
King Power The King Power International Group ( th, กลุ่มบริษัท คิง เพาเวอร์ อินเตอร์เนชันแนล) is a Thai travel retail group, based in Bangkok. The chairman and CEO was Vichai Sriva ...
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 A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the en ...
refund may be claimed at the airport upon departure. In the
Philippines The Philippines (; fil, Pilipinas, links=no), officially the Republic of the Philippines ( fil, Republika ng Pilipinas, links=no), * bik, Republika kan Filipinas * ceb, Republika sa Pilipinas * cbk, República de Filipinas * hil, Republ ...
, there is one
shopping mall A shopping mall (or simply mall) is a North American term for a large indoor shopping center, usually anchored by department stores. The term "mall" originally meant a pedestrian promenade with shops along it (that is, the term was used to refe ...
called the Duty Free Philippines Fiestamall, which is located a few miles away from
Ninoy Aquino International Airport Ninoy Aquino International Airport (NAIA , ; fil, Paliparang Pandaigdig ng Ninoy Aquino or ''Pandaigdigang Paliparan ng Ninoy Aquino''; ), originally known and still commonly referred to as Manila International Airport (MIA), is the main ...
as opposed to being at the airport itself. It is the only
shopping mall A shopping mall (or simply mall) is a North American term for a large indoor shopping center, usually anchored by department stores. The term "mall" originally meant a pedestrian promenade with shops along it (that is, the term was used to refe ...
of its kind in the world. The goods that are sold in this mall are often imported products which come from around the world (mainly from United States,
Asia Asia (, ) is one of the world's most notable geographical regions, which is either considered a continent in its own right or a subcontinent of Eurasia, which shares the continental landmass of Afro-Eurasia with Africa. Asia covers an area ...
and
Australasia Australasia is a region that comprises Australia, New Zealand and some neighbouring islands in the Pacific Ocean. The term is used in a number of different contexts, including geopolitically, physiogeographically, philologically, and ecologica ...
) and are not found in any other shopping malls in the country, aside from duty-free malls. Tourists, visitors and returning citizens of Philippines often pay a visit to this mall shortly after their arrival (since only arriving passengers and their companions are allowed access). In order to gain entry, a passport is needed to be presented and registered at the Customer Registration Counter 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 validation of purchases. Arriving customers are given a certain tax-free allowance on purchases and anything in excess will be subject to local and national taxes. In the past, the mall used to only accept
US dollar The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
s and
Philippine peso The Philippine peso, also referred to by its Tagalog name ''piso'' (Philippine English: , , plural pesos; tl, piso ; sign: ₱; code: PHP), is the official currency of the Philippines. It is subdivided into 100 ''sentimo'', also called ce ...
but in recent years, it had begun accepting other currencies such as
Japanese yen The is the official currency of Japan. It is the third-most traded currency in the foreign exchange market, after the United States dollar (US$) and the euro. It is also widely used as a third reserve currency after the US dollar and the ...
,
Brunei dollar The Brunei dollar ( sign: B$, Malay: ''ringgit Brunei'', currency code: ''BND''), has been the currency of the Sultanate of Brunei since 1967. It is normally abbreviated with the dollar sign $, or alternatively B$ to distinguish it from othe ...
,
Australian dollar The Australian dollar (sign: $; code: AUD) is the currency of Australia, including its external territories: Christmas Island, Cocos (Keeling) Islands, and Norfolk Island. It is officially used as currency by three independent Pacific Island s ...
,
British pound Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom and nine of its associated territories. The pound ( sign: £) is the main unit of sterling, and t ...
,
Canadian dollar The Canadian dollar ( symbol: $; code: CAD; french: dollar canadien) is the currency of Canada. It is abbreviated with the dollar sign $, there is no standard disambiguating form, but the abbreviation Can$ is often suggested by notable style ...
,
Euro The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
,
Swiss franc The Swiss franc is the currency and legal tender of Switzerland and Liechtenstein. It is also legal tender in the Italian exclave of Campione d'Italia which is surrounded by Swiss territory. The Swiss National Bank (SNB) issues banknotes and the f ...
,
Saudi riyal The Saudi riyal ( ar, ريال سعودي ') is the currency of Saudi Arabia. It is abbreviated as or SAR ''(Saudi Arabian Riyal)''. It is subdivided into 100 halalas ( ar, هللة '). The currency is pegged to the US dollar at a constant rate ...
, Bahraini dinar, and
Thai baht The baht (; th, บาท, ; currency sign, sign: ฿; ISO 4217, code: THB) is the official currency of Thailand. It is divided into 100 ''satang'' (, ). The issuance of currency is the responsibility of the Bank of Thailand. Society for Worldw ...
. Currency exchange booths are also available inside the mall if a customer wishes to exchange currencies into Philippine pesos or US dollars. Credits cards can also be used for purchasing goods. In Australia, duty-free shops, once common, have all but disappeared since the introduction of
GST GST may refer to: Taxes * General sales tax * Goods and Services Tax, the name for the value-added tax in several jurisdictions: ** Goods and services tax (Australia) ** Goods and Services Tax (Canada) ** Goods and Services Tax (Hong Kong) **G ...
in 2000. Retailer James Richardson operates several duty-free shops in major cities, but most duty-free shops are now located within international airports. Residents and tourists are allowed to purchase virtually any physical good within 60 days of departure, which needs to be taken on the outward flight, and claim the GST component back through the Tourist Refund Scheme when passing through customs. Consumers are now free to fully use their items prior to departure. This is in contrast prior to 2000, where all purchases had to be packed by the duty-free store in a sealed clear
plastic bag A plastic bag, poly bag, or pouch is a type of container made of thin, flexible, plastic film, nonwoven fabric, or plastic textile. Plastic bags are used for containing and transporting goods such as foods, produce, powders, ice, magazines, c ...
, and could only be broken open by customs staff just prior to departure.


Duty-free outside EU ports

Any traveller living in a country outside the EU VAT area is entitled to shop tax-free at participating shops in the EU. Tax free shopping differs from duty-free shopping as the traveller pays the VAT on goods in the shop in the usual way, and can then request a refund when exporting the goods. There are a number of tax-free operators who can support both the stores and the traveler through this process. To qualify, the traveller must: *have residency in a non-EU country *have a maximum stay of six months within the EU *make purchases no more than three months prior to export *obtain a form from the shop where he or she makes the purchase (depending on the tax-free operator) *present the form, and in certain cases the goods, to a
customs officer A customs officer is a law enforcement agent who enforces customs laws, on behalf of a government. Canada Canadian customs officers are members of the Canada Border Services Agency. It was created in 2003 and preceded by the Canada Customs and ...
or DIVA machine when leaving the EU, where they will be stamped Only goods meant for personal use are eligible for the refund. The stamped forms and receipts can then be sent back to the retailers, or their agents, for a refund. In most cases, a minimum purchase applies to use the tax-free shopping scheme. The actual amount of VAT reclaimable depends on the VAT rate applicable in the particular country to the goods purchased, and may be subject to a deduction for administration fees.


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 and Singapore on the same day, as long as the liquid item is sealed in a plastic
security bag A security bag is a heavy duty bag used to contain high-value products or documents or legally sensitive items. Envelopes with security features are called security envelopes as well as security bags. Cash for deposit in a bank is often place ...
with the receipt showing in the bag. Arrivals duty-free shops are now becoming more common. Most of South and Central America, and the Caribbean have such shops, as does South East Asia and Oceania. Switzerland and Canada are looking to introduce them in 2010. This method of retail removes any security problems with the transit of liquids, as they are not carried on aircraft. Several airlines do not allow sales of certain sharp objects in-flight due to security risk. Other objects that have sharp parts, such as model airplanes, may be bought in-flight but received at the passengers' home address for the same reason.


Boarding Pass / Passports

Proof of travel may be requested at the checkout point to prevent airport employees from making personal purchases.


Inbound duty-free

Some countries or districts, including
Argentina Argentina (), officially the Argentine Republic ( es, link=no, República Argentina), is a country in the southern half of South America. Argentina covers an area of , making it the second-largest country in South America after Brazil, th ...
,
Australia Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...
,
Brazil Brazil ( pt, Brasil; ), officially the Federative Republic of Brazil (Portuguese: ), is the largest country in both South America and Latin America. At and with over 217 million people, Brazil is the world's fifth-largest country by area ...
,
Chile Chile, officially the Republic of Chile, is a country in the western part of South America. It is the southernmost country in the world, and the closest to Antarctica, occupying a long and narrow strip of land between the Andes to the east a ...
,
China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
,
Colombia Colombia (, ; ), officially the Republic of Colombia, is a country in South America with insular regions in North America—near Nicaragua's Caribbean coast—as well as in the Pacific Ocean. The Colombian mainland is bordered by the Car ...
,
Iceland Iceland ( is, Ísland; ) is a Nordic island country in the North Atlantic Ocean and in the Arctic Ocean. Iceland is the most sparsely populated country in Europe. Iceland's capital and largest city is Reykjavík, which (along with its s ...
,
Italy Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical re ...
,
Iran Iran, officially the Islamic Republic of Iran, and also called Persia, is a country located in Western Asia. It is bordered by Iraq and Turkey to the west, by Azerbaijan and Armenia to the northwest, by the Caspian Sea and Turkmeni ...
,
India India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
,
Jamaica Jamaica (; ) is an island country situated in the Caribbean Sea. Spanning in area, it is the third-largest island of the Greater Antilles and the Caribbean (after Cuba and Hispaniola). Jamaica lies about south of Cuba, and west of His ...
,
Kenya ) , national_anthem = "Ee Mungu Nguvu Yetu"() , image_map = , map_caption = , image_map2 = , capital = Nairobi , coordinates = , largest_city = Nairobi , ...
,
Lebanon Lebanon ( , ar, لُبْنَان, translit=lubnān, ), officially the Republic of Lebanon () or the Lebanese Republic, is a country in Western Asia. It is located between Syria to the north and east and Israel to the south, while Cyprus li ...
,
Malaysia Malaysia ( ; ) is a country in Southeast Asia. The federation, federal constitutional monarchy consists of States and federal territories of Malaysia, thirteen states and three federal territories, separated by the South China Sea into two r ...
,
New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 smaller islands. It is the sixth-largest island count ...
,
Norway Norway, officially the Kingdom of Norway, is a Nordic country in Northern Europe, the mainland territory of which comprises the western and northernmost portion of the Scandinavian Peninsula. The remote Arctic island of Jan Mayen and t ...
,
Panama Panama ( , ; es, link=no, Panamá ), officially the Republic of Panama ( es, República de Panamá), is a transcontinental country spanning the southern part of North America and the northern part of South America. It is bordered by Cos ...
,
Philippines The Philippines (; fil, Pilipinas, links=no), officially the Republic of the Philippines ( fil, Republika ng Pilipinas, links=no), * bik, Republika kan Filipinas * ceb, Republika sa Pilipinas * cbk, República de Filipinas * hil, Republ ...
,
Sri Lanka Sri Lanka (, ; si, ශ්‍රී ලංකා, Śrī Laṅkā, translit-std=ISO (); ta, இலங்கை, Ilaṅkai, translit-std=ISO ()), formerly known as Ceylon and officially the Democratic Socialist Republic of Sri Lanka, is an ...
,
Switzerland ). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...
,
Taiwan Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the nort ...
,
Turkey Turkey ( tr, Türkiye ), officially the Republic of Türkiye ( tr, Türkiye Cumhuriyeti, links=no ), is a list of transcontinental countries, transcontinental country located mainly on the Anatolia, Anatolian Peninsula in Western Asia, with ...
,
United Arab Emirates The United Arab Emirates (UAE; ar, اَلْإِمَارَات الْعَرَبِيَة الْمُتَحِدَة ), or simply the Emirates ( ar, الِْإمَارَات ), is a country in Western Asia (The Middle East). It is located at th ...
and
Uzbekistan Uzbekistan (, ; uz, Ozbekiston, italic=yes / , ; russian: Узбекистан), officially the Republic of Uzbekistan ( uz, Ozbekiston Respublikasi, italic=yes / ; russian: Республика Узбекистан), is a doubly landlocked cou ...
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. Other countries such as Canada and Sweden have been considering duty-free on arrival. The European Union does not permit arrivals duty-free stores; some EU airports sell goods on arrival in the baggage claim area described as "Tax-Free", but these goods are all tax-paid sales, the local sales tax is discounted. Normally, discounted liquors or tobacco products cannot be bought when arriving into an EU Member State as there is often a high local Excise Duty on these goods as well as the local sales tax (VAT/IVA/TVA) which is included in the price. In some EU Territories the tax on tobaccos and liquors is lower than in other EU countries, which is why the prices still seem competitive and look like duty-free prices. A good example is the difference in tobacco prices between the UK and Ireland, compared to Spain or Portugal.


Legal basis

It is a common feature of most tax systems that taxes are not raised on goods to be exported. To do so could place the goods at a disadvantage to those from other countries, for example if the tax rate in the territory of sale is higher than the tax rate in the territory of consumption. Either the tax system allows the goods to be exported without taxes (stored prior to export in a
bonded warehouse A bonded warehouse, or bond, is a building or other secured area in which dutiable goods may be stored, manipulated, or undergo manufacturing operations without payment of duty. It may be managed by the state or by private enterprise. In the l ...
), or taxes can be claimed back when they are exported (see
VAT A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the en ...
). 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 traveling 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 for personal use 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 country of sale), and they are importing into the destination country under that country's own tax rules. In some countries, in order to ensure that goods are exported intact, they are hand-delivered in a closed bag to the passenger at the gate after their ticket is scanned. In the United States, duty-free shops are technically considered class 9 Bonded Warehouses with regard to the U.S. Customs & Border Protection: * Class 9. Bonded warehouse, known as duty-free stores, used for selling, for use outside the Customs territory, conditionally duty-free merchandise owned or sold by the proprietor and delivered from the Class 9 warehouse to an airport or other exit point for exportation by, or on behalf of, individuals departing from the Customs territory for destinations other than foreign trade zones. Pursuant to 19 U.S.C. 1555(b)(8)(C), Customs territory, for purposes of duty-free stores, means the Customs territory of the U.S. as defined in 101.1(e) of this chapter, and foreign trade zones (see part 146 of this chapter). All distribution warehouses used exclusively to provide individual duty-free sales locations and storage cribs with conditionally duty-free merchandise are also Class 9 warehouses. Moreover, in the U.S. some duty-free stores will sell their goods to domestic passengers with appropriate taxes included. Alcohol and tobacco products are restricted to international passengers only and subject to the age limitations of 18 and 21 respectively, even though the age one must be to import those items into other countries may be lower.


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.


Competition

According to Autogrill / World Duty Free case, duty free is a market where competition is kept both in the EEA market and in the global market. Even with the 2008 merge of the two biggest duty free operators, Autogrill and World Duty Free, they together own less than 10% of the global market and less than 20% of the EEA market.Case No COMP/M.5123, AUTOGRILL / WORLD DUTY FREE, only the English text is available and authentic REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 6(1)(b) NON-OPPOSITION


See also

*
Fuel tax A fuel tax (also known as a petrol, gasoline or gas tax, or as a fuel duty) is an excise tax imposed on the sale of fuel. In most countries the fuel tax is imposed on fuels which are intended for transportation. Fuels used to power agricultural v ...
, jet fuel used in international flights is sold duty-free *
List of duty-free shops This is a list of duty-free shops. A duty-free shop is a retail outlet that is exempt from the payment of certain local or national tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual ...
*
Tax-free shopping Tax-free shopping (TFS) is the buying of goods in another country or state and obtaining a refund of the sales tax which has been collected by the retailer on those goods. The sales tax may be variously described as a sales tax, goods and servi ...


References


External links


U.S. Customs and Border Protection Regulations for International Travel by U.S. Residents ("Know Before You Go")
{{DEFAULTSORT:Duty-Free Shop Customs duties Borders Retail formats Special economic zones Tax avoidance 1947 introductions