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UK Government To Return Tax-Free Shopping For International Tourists

UK Government To Return Tax-Free Shopping For International Tourists
September 23, 2022

The government said it would consult on introducing a new tax-free shopping scheme for Great Britain and would modernise the one in place in Northern Ireland.

The United Kingdom (UK) is set to bring back sales and tax-free shopping for overseas visitors to boost the country’s flagging retail sector.

The UK Finance Minister, Kwasi Kwarteng, made this known on Friday, as the retailers and the hospitality industry welcomed the planned return of VAT-free shopping for international tourists, saying it would help to boost sales, Euro News reports.

“Britain welcomes millions of tourists every year, and I want our high streets and airports, our ports and our shopping centres, to feel the economic benefit. So we have decided to introduce VAT-free shopping for overseas visitors,” he told parliament during the presentation of a mini-budget.

Kwarteng said the government would replace the previous paper-based system with a digital one.

“And this will be in place as soon as possible,” he said.

A previous tax-free shopping was abolished at the end of 2020. Kwarteng said the government would replace the previous paper-based system with a digital one. “And this will be in place as soon as possible.”

Linda Ellett, KPMG‘s UK head of consumer markets, retail and leisure, said the move would increase the UK’s competitiveness when it comes to attracting international visitors.

“This is all the more key as we look to find ways to create economic growth, return international tourism to pre-pandemic volumes, and withstand rising inflation on the high street,” she said.

Nigel Keal, chair, UK travel retail forum, welcomed the new development.

“This is a fantastic announcement by a government that has been clear from the start of its intention to put aside Treasury orthodoxy and find new ways to generate growth for the UK economy and industries. The travel retail industry welcomes today’s news,” he said.

The government said it would consult on introducing a new tax-free shopping scheme for Great Britain and would modernise the one in place in Northern Ireland.

According to the report, the scheme will enable tourists to get a refund on VAT on goods bought on the high street, at airports and other departure points and exported from the UK in their personal baggage.

The move, which will cost almost £1.3bn in 2024-25, when it is likely to be brought in according to government documents published alongside Kwasi Kwarteng’s mini-budget on Friday unwinds the scrapping of the long-term VAT-free scheme in January 2021 by the former chancellor Rishi Sunak after Brexit.

The government said a consultation would “gather views on the approach and design of the scheme” before it was delivered as soon as possible.