Best Tax-Free Shopping Surprises
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tax refunds are the norm in Europe. But lately they’re popping up in unexpected
places. Here’s how to take advantage of tax-free shopping around the world.
are times when looking like a tourist is smart advice—especially when an
overseas shopkeeper asks if you’d like a VAT (Value Added Tax) receipt to
qualify for a tax refund.
rebate programs, available only to nonresidents, are commonplace in Europe. But
there are a growing number of countries around the world where you can also get
a refund—if you follow the right steps, beginning from the moment you make the
kicked off the refund trend in Asia in 2004, and was soon followed by
Indonesia, Japan, Korea, and Thailand. Unknown to many travelers, Mexico began
offering tax refunds in 2008 (just a year after Canada canceled its rebate
program for individual travelers).
VAT and GST (Goods and
Services Tax) place
the tax burden on the end consumer, chargeable in the place where the
merchandise is used. In many places, purchased goods taken out of the country
by nonresidents aren’t subject to the VAT/GST, which
ranges from 5 percent in Japan to 25 percent in Sweden, Norway, and Denmark.
Even so, you usually have to pay the tax, at least temporarily, when
buying an item. That’s why you’ll need to file the appropriate papers for a
refund when you’re ready to leave.
are procedural nuances from place to place, but the basics are the same around
the world. Buy your goods from an authorized tax-free-shopping merchant. Make
the minimum required purchase (as low as $17 in Argentina, as much as $300 in
Australia), if there is one, and have the clerk fill out the necessary tax
forms. Bring your passport for identification. At the airport, show your goods
to the Customs Office before you go through security, and have your tax forms
stamped. You can then pack the goods into your luggage and check in (except in
Australia, which requires you to carry on your tax-free purchases, apart from
wine and oversize items). After you pass through security, submit your forms at
a tax-refund kiosk for an immediate refund or to have a check mailed to your
though, that many countries charge a commission on refunds. If you want the
refund credited to your charge card, expect to pay $4 in South Africa. Israel
has a sliding commission scale, ranging from as little as 5 percent to a high
of 15 percent, depending on the refund amount. Mexico charges a whopping 35
matter where you do your tax-free shopping, remember:
out the minimum purchase requirement, if any, for a single item or total
amounts, as well as the step-by-step procedures. Get details on dozens of
countries from tax-free-shopping operators premiertaxfree.com and
for merchants’ signs or window stickers that say Tax-Free Shopping or VAT
- Shop around.
A lower price at a nonparticipating merchant might be a better deal than a higher
price at a participating merchant, despite the refund.
almost always need to show your purchases to a Customs Officer at the airport
might not add up to much money after all is said and done. But the bottom line
is whether you want that money to end up in your pocket or with the excise man.