subject: Duty Free Conundrums: Is It Cheap Really? [print this page] Tax and Duty Free shopping is available to customers who are leaving the country for an international destination. Tax and duty free items are sold at a price less sales tax and other taxes imposed by governments. Often the savings from Duty Free Shopping can be significant. Although these shops stock many goods, the most popular items in duty free shops are personal care products and other consumables such as liquor and tobacco.
Duty Free allowances refer to your first point of actual international arrival; this excludes passengers on transit waiting for connection flights in the airside transit lounges. A transit lounge is considered "out of the country" and therefore not an arrival destination. Duty free shopping can save you up to 5-25 percent, depending on the country.
Duty-free shops (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 on board passenger ships. The first duty free shop was established in 1947 at the Shannon Airport Ireland. Duty Free goods are generally deemed to be for personal consumption or gifts for persons in the traveller' destination. So even those traveling in groups can only buy items deemed to be for their own personal consumption. In most cases,the quantity is limited to one item per person and must be seen to be a reasonable amount. Duty Free allowances are not normally granted to minors under 18 years of age.
Technically speaking, there is a difference between what is known as Tax Free and Duty Free. Whereas Duty Free means goods free of government imposed taxes (Excise Duties), Tax Free means goods sold at a price less sales tax such as Value Added Tax. Most tax-free goods are pegged on reduced price rather than the amount or volume you are allowed to buy. Most countries around the globe have a set duty free allowance of 200 cigarettes (1 carton) and 1 Liter of Spirits such as whisky. The restrictions placed on these purchases vary from one country to another. Goods such as Cosmetics, fragrances and gifts attract these sales taxes in a domestic market, but in most countries Duty Free shops are allowed to discount this tax.
For instance, World Duty Free (WDF) says that the Australian authorities do not allow hand-carried duty-free bottles of more than 100ml into the country at all, unless purchased at "the last port of call". This can be confusing because if you are flying say from Europe to Australia via Hong Kong or Singapore, where most Australian bound airlines re-fuel, then technically this is your last port of call. Therefore customs in Australia may confiscate your duty free stuff that you might have bought in Europe. Partly as a result of these complexities, the EU abolished duty-free on intra-EU travel in 1999. But other countries still retain duty-free shopping for international travellers.
Duty-free shops in high tax countries are constrained by the prices of lower tax countries. As always when tax concessions are given to selected activities there is always a tax inducement to encourage indulgence. In order for travellers to wish to purchase anywhere other than the country of arrival, the price saving they must make must at least cover the additional inconvenience cost they incur buying away from home. The airport shop of the low tax country may set a price above the domestic high street price in some circumstances. However the airport shop of the high tax country will set a price below that of the domestic high street. It is thought that there is a tendency for high tax countries to pass on more of the duty-free saving to the consumer.
These days you can do your duty free shopping online too. Not only will this save you time at the Airport but you can purchase items that you really want, rather than making those rushed decisions at the Airport. In most cases duty free online web sites show you the brands and products that are available in store. Once securely paid for, your online order will be prepared for collection prior to your arrival, so you can simply visit the duty free store, identify yourself, show your airline tickets and take away your goods.
In conclusion just like you would do window-shopping, don't fall for retail impulse-buying. Think about geography and currency exchange rates.Basically do your math.
