DUTY-FREE SHOP

'Duty-free shops' (or 'stores') are retail outlets that do not apply local or national taxes and duties. They are often found in the international zone of international airports, sea ports or onboard 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 (EU) in 1999, but are retained for travelers whose final destination is outside the EU. They also sell to intra-EU travellers 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 shopping is also available to foreign visitors in many ordinary shops in some cities. In this case, the visitors will pay the normal price, but the tax is refunded when the goods are exported. In the case of the EU, the tax is refunded when the goods leave the EU.

Contents

History

Legal basis

Intra-EU travel

External links

History

The world's first Duty Free shop was established at Shannon Airport in Ireland in 1946 and is in service to this date. Designed to provide a service for Trans-Atlantic airline passengers typically traveling 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 world-wide.
This concept of duty-free shopping was expanded by two American entrepreneurs, Charles Feeney and Robert W. Miller, who created the corporation "Duty-Free Shops" on November 7, 1960. Beginning in Hong Kong and spreading from there to Europe and America, the corporation eventually grew into a worldwide enterprise. Robert Miller sold his stake in this corporation in 1996 for £954 million. [1]
The first Duty-Free Liquor counter at London Airport, by Fortes Caterers, was opened 9 December 1959.
Without duty, a bottle of Whiskey cost only 21/- or $3.
Duty-free shops are also a mainstay in the Akihabara electronic shopping district of Tokyo.

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 later aircraft), because they are consumed outside the country. Businesses supplying goods for ships can supply these tax and duty-free.
Most tax regimes also allow travellers 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, and is an inconvenience to the passengers, to collect the small amounts of tax involved.
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 traveller's Duty-free allowance.
A Duty-free shop in an airport of departure (or at a harbour or land border) works under the same system. The goods must be exported intact (you cannot consume them in the airport), and you import them into the country of destination under that country's tax rules.

Intra-EU travel

Duty-free sales were abolished between EU countries based on the following:

★ The EU is a customs union. Travel between two EU countries is internal (not international) travel for tax purposes, therefore Duty-free sales should not apply.

★ Duty-free sales were a source of profit for airports, airlines and ferry companies. They were an indirect tax subsidy which did not apply to other forms of transport, They therefore should be abolished.

External links

★ The Duty Free Shopping Index - A Duty Free shop locator

★ The Duty Free Price Guide - Shows some price variations between Duty Free shops

★ Duty Free Blog - Duty Free Blog