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A duty-free shop (or store) is a
retail outlet Retail is the process of selling consumer goods A final goods or consumer goods is a commodity that is used by the consumer to satisfy current wants or needs, unlike intermediate goods which is utilized to produce another goods. A microwave o ...
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 In law Law is a system A system is a group of Interaction, interacting or interrelated elements that act accord ...
es and
duties A duty (from "due" meaning "that which is owing"; fro, deu, did, past participle of ''devoir''; la, debere, debitum, whence "debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to anot ...
, on the requirement that the goods sold will be sold to travelers who will take them out of the country. 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. 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 Border control is the measures taken by a state or a bloc of states to monitor its borders and regulate the movement of people, animals, and goods across the border. History States and rulers have always regarded the ability to determine who ...
of international
airport An airport is an aerodrome An aerodrome (Commonwealth English The use of the English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon England, early medieval En ...

airport
s, sea
port A port is a maritime law, maritime facility comprising one or more Wharf, wharves or loading areas, where ships load and discharge Affreightment, cargo and passengers. Although usually situated on a sea coast or estuary, ports can a ...

port
s, and
train station A train station, railway station, railroad station or depot is a railway Rail transport (also known as train transport) is a means of transferring passengers and goods on wheeled vehicle A vehicle (from la, vehiculum) is a machine ...

train station
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'', wherein a sum equivalent to the tax is paid, but then the goods are presented to customs and the sum reimbursed on exit. These outlets were abolished for intra-
EU
EU
travellers in 1999, 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
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, constituting 0.51% of its land area an ...
,
Livigno Livigno (; local lmo, Livígn ; german: Luwin) is a town, ''comune The (; plural: ) is a local administrative division of Italy Italy ( it, Italia ), officially the Italian Republic ( it, Repubblica Italiana, links=no ), is a count ...
and the
Canary Islands The Canary Islands (; es, Islas Canarias, ), also known informally as ''the Canaries'', is a Spanish archipelago An archipelago ( ), sometimes called an island group or island chain, is a chain, cluster or collection of island ...
, are within the EU but outside the EU tax union, and thus still continue duty-free sales for all travelers. Tax Free World Association (TFWA) announced that in 2011
Asia-Pacific The Asia-Pacific is the part of the world In its most general sense, the term "world" refers to the totality of entities, to the whole of reality or to everything that is. The nature of the world has been conceptualized differently in dif ...

Asia-Pacific
, with 35 percent of global duty-free and travel retail sales, beat 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. 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 airport ...

Incheon Airport
, 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 o ...
with 2016 sales of $1.82 billion.


History

Brendan O'Regan 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 air ...
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 and
Robert Warren Miller Robert Warren Miller (born May 23, 1933) is an American-born British billionaire, entrepreneur, co-founder of DFS Group, DFS (Duty Free Shops), and sailing champion. He is the father of Marie-Chantal, Crown Princess Marie-Chantal of Greece, Princ ...
, 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. In 1996
LVMH LVMH Moët Hennessy Louis Vuitton (), commonly known as LVMH, is a French Holding company, holding multinational corporation and conglomerate (company), conglomerate specializing in luxury goods, headquartered in Paris. The company was formed in ...
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 * 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 e ...
,
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 of . Since its inaugural flight from to ...

El Al
,
Singapore Airlines Singapore Airlines (abbreviation An abbreviation (from Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, k ...

Singapore Airlines
,
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 E ...

Middle East Airlines
,
Ukraine International Airlines Ukraine International Airlines PJSC, often shortened to UIA ( uk, Авіакомпанія Міжнародні Авіалінії України, Aviakompaniya Mizhnarodni Avialiniyi Ukrayiny, ), is the flag carrier A flag carrier is a tr ...
,
Delta Delta commonly refers to: * Delta (letter) (Δ or δ), a letter of the Greek alphabet * River delta, a landform at the mouth of a river * D (NATO phonetic alphabet: "Delta"), the fourth letter of the modern English alphabet * Delta Air Lines, an Ame ...
, and
Avianca Avianca S.A. (acronym and initialism, acronym in Spanish for ''Aerovias del Continente Americano S.A.'', "Airways of the American Continent") is a List of airlines of Colombia, Colombian airline. It has been the flag carrier of Colombia since 5 D ...

Avianca
, offer duty-free sales on their flights.


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 Tokyo ( , ; Japanese language, Japanese: 東京, ''Tōkyō'' ), officially the Tokyo Metropolis (Japanese language, Japanese: 東京都, ''Tōkyō-to'' ...

Akihabara
electronic shopping district of
Tokyo Tokyo (Japanese language, Japanese: , ''Tōkyō'' ), historically known in the west as Tokio and officially the Tokyo Metropolis (, ''Tōkyō-to''), is capital of Japan, the capital and most populous Prefectures of Japan, prefecture of Japan ...

Tokyo
. In Thailand, the
King Power The King Power International Group ( th, กลุ่มบริษัท คิง เพาเวอร์ อินเตอร์เนชันแนล) is a Thai travel Travel is the movement of people between distant geographical ...

King Power
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 A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity In law, a legal ...
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 ...

Philippines
, there is one
shopping mall A shopping mall (or simply mall) is a North American term for a large indoor shopping center A shopping center (American English) or shopping centre (Commonwealth English), also called a shopping complex, shopping arcade, shopping plaza or ga ...

shopping mall
called the Duty Free Philippines Fiestamall, which is located a few miles away from
Ninoy Aquino International Airport Ninoy Aquino International Airport ( fil, Paliparang Pandaigdig ng Ninoy Aquino) or NAIA (, locally ), formerly known and still commonly referred to as Manila International Airport as well as by its codename Nichols Field (Nichols), is the ai ...
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 A shopping center (American English) or shopping centre (Commonwealth English), also called a shopping complex, shopping arcade, shopping plaza or ga ...

shopping mall
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 Earth's largest and most populous continent, located primarily in the Eastern Hemisphere, Eastern and Northern Hemisphere, Northern Hemisphere of the Earth, Hemispheres. It shares the continental landmass of Eurasia with the cont ...

Asia
and
Australasia Australasia is a region In geography Geography (from Ancient Greek, Greek: , ''geographia'', literally "earth description") is a field of science devoted to the study of the lands, features, inhabitants, and phenomena of the Earth ...

Australasia
) 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 A symbol is a mark, sign, or that indicates, signifies, or is understood as representing an , , or . Symbols allow people to go beyond what is n or seen by creating linkages between otherwise very diffe ...
s and
Philippine peso The Philippine peso, also referred to by its Filipino name piso (Philippine English: , , plural pesos; fil, piso ; currency sign, sign: ₱; ISO 4217, code: PHP), is the official currency of the Philippines. It is subdivided into 100 centavos ...
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 The foreign exchange market (Forex, FX, or currency market) is a global decentralized Decentralization or decentralisation ...
,
Brunei dollar The Brunei dollar (Malay Malay may refer to: Languages * Malay language or Bahasa Melayu, a major Austronesian language spoken in Indonesia, Malaysia, Brunei and Singapore ** History of the Malay language#Old Malay, the Malay language from ...
,
Australian dollar The Australian dollar (sign A sign is an object Object may refer to: General meanings * Object (philosophy), a thing, being, or concept ** Entity, something that is tangible and within the grasp of the senses ** Object (abstract), ...
, British pound,
Canadian dollar The Canadian dollar (symbol A symbol is a mark, sign, or that indicates, signifies, or is understood as representing an , , or . Symbols allow people to go beyond what is n or seen by creating linkages between otherwise very different ...
,
Euro The euro (currency symbol, symbol: euro sign, €; ISO 4217, code: EUR) is the official currency of 19 of the Member state of the European Union, member states of the European Union. This group of states is known as the eurozone or euro area ...

Euro
, Swiss franc,
Saudi riyal #REDIRECT Saudi riyal #REDIRECT Saudi riyal#REDIRECT Saudi riyal The Saudi riyal ( ar, ريال سعودي '); is the currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most spec ...
,
Bahraini dinar The dinar ( ar, دينار ') ( sign: .د.ب or BD; code: BHD) is the currency of Bahrain. It is divided into 1000 fils (فلس). The Bahraini dinar is abbreviated د.ب (Arabic) or ''BD'' (Latin). It is usually represented with three decimal ...
, and Thai baht. 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 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 Plastic film is a thin continuous polymeric material. Thicker plastic material is often called a "sheet". These thin plastic membranes are used ...
, 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 The European Union value-added tax (or EU VAT) is a value added tax on Good (economics), goods and services within the European Union (EU). The EU's institutions do not collect the tax, but member states of the European Union, EU member states a ...
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 Customs is an authority In the fields of sociology Sociology is the study of society, human social behaviour, patterns of social relationships, social interaction, 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 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 located mostly in the southern half of South America South America is a continent A continent is any of several large landmasse ...

Argentina
,
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 ...

Australia
,
Brazil Brazil ( pt, Brasil; ), officially the Federative Republic of Brazil (Portuguese: ), is the largest country in both South America and Latin America. At 8.5 million square kilometers (3.2 million square miles) and with over 211 mill ...

Brazil
,
Chile Chile, officially the Republic of Chile, is a country in the western part of South America South America is a entirely in the and mostly in the , with a relatively small portion in the . It can also be described as the southern ...

Chile
,
China China (), officially the People's Republic of China (PRC; ), is a country in East Asia East Asia is the eastern region of Asia Asia () is Earth's largest and most populous continent, located primarily in the Eastern Hemisphere ...

China
,
Colombia Colombia ( , ; ), officially the Republic of Colombia, is a transcontinental country This is a list of countries located on more than one continent A continent is one of several large landmasses. Generally identified by conv ...

Colombia
,
Iceland Iceland ( is, Ísland; ) is a Nordic Nordic most commonly refers to: * Nordic countries, written in plural as Nordics, the northwestern European countries, including Scandinavia, Fennoscandia and the List of islands in the Atlantic Ocean#N ...

Iceland
,
Italy Italy ( it, Italia ), officially the Italian Republic ( it, Repubblica Italiana, links=no ), is a country consisting of a peninsula delimited by the Alps The Alps ; german: Alpen ; it, Alpi ; rm, Alps; sl, Alpe ) are the highest ...

Italy
,
Iran Iran ( fa, ایران ), also called Persia, and officially the Islamic Republic of Iran, is a country in Western Asia Western Asia, West Asia, or Southwest Asia, is the westernmost subregion A subregion is a part of a larger regio ...

Iran
,
India India, officially the Republic of India (Hindi Hindi (Devanagari: , हिंदी, ISO 15919, ISO: ), or more precisely Modern Standard Hindi (Devanagari: , ISO 15919, ISO: ), is an Indo-Aryan language spoken chiefly in Hindi Belt, ...

India
,
Jamaica Jamaica (; ) is an island country An island country or an island nation is a country A country is a distinct territory, territorial body or political entity. It is often referred to as the land of an individual's birth, residence or ...

Jamaica
,
Kenya ) , national_anthem = "Ee Mungu Nguvu Yetu "Ee Mungu Nguvu Yetu" (, ) is the national anthem of Kenya. History "Ee Mungu Nguvu Yetu"'s lyrics were originally written in Swahili language, Kiswahili, the national language of Kenya ...

Kenya
,
Lebanon Lebanon ( , ar, لُبْنَان, translit=lubnān, ), officially the Republic of Lebanon or the Lebanese Republic, is a country in Western Asia Western Asia, West Asia, or Southwest Asia, is the westernmost subregion A subregion is a part ...

Lebanon
,
Malaysia Malaysia ( ; ) is a country in Southeast Asia Southeast Asia, also spelled South East Asia and South-East Asia, and also known as Southeastern Asia or SEA, is the geographical southeastern subregion of Asia, consisting of the regions ...

Malaysia
,
New Zealand New Zealand ( mi, Aotearoa ''Aotearoa'' (; commonly pronounced by English English usually refers to: * English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon Engl ...

New Zealand
,
Norway Norway, officially the Kingdom of Norway,Names in the official and recognised languages: Bokmål Bokmål (, ; literally "book tongue") is an official written standard for the Norwegian language Norwegian (Norwegian: ''norsk'') is a Nort ...

Norway
,
Panama Panama ( , ; es, link=no, Panamá ), officially the Republic of Panama ( es, República de Panamá), is a transcontinental country This is a list of countries located on more than one continent A continent is one of several ...

Panama
,
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 ...

Philippines
,
Sri Lanka Sri Lanka (, ; si, ශ්‍රී ලංකාව, 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 ...

Sri Lanka
,
Switzerland , french: Suisse(sse), it, svizzero/svizzera or , rm, Svizzer/Svizra , government_type = Federalism, Federal semi-direct democracy under an assembly-independent Directorial system, directorial republic , leader_title1 = Fe ...

Switzerland
,
Taiwan Taiwan, officially the Republic of China (ROC), is a country in East Asia East Asia is the eastern region of Asia Asia () is Earth's largest and most populous continent, located primarily in the Eastern Hemisphere, Eastern and N ...

Taiwan
,
Turkey Turkey ( tr, Türkiye ), officially the Republic of Turkey, is a country located mainly on Anatolia Anatolia,, tr, Anadolu Yarımadası), and the Anatolian plateau. also known as Asia Minor, is a large peninsula in Western Asia an ...

Turkey
,
United Arab Emirates The United Arab Emirates (UAE; ar, الإمارات العربية المتحدة ) or the Emirates ( ar, الإمارات ), is a country in Western Asia Western Asia, West Asia, or Southwest Asia, is the westernmost subregion A subregio ...

United Arab Emirates
and
Uzbekistan Uzbekistan (, ; uz, Ozbekiston, italic=yes, ), officially the Republic of Uzbekistan ( uz, Ozbekiston Respublikasi, italic=yes), is a doubly landlocked country A landlocked country is a country A country is a distinct territory, ter ...

Uzbekistan
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 A duty (from "due" meaning "that which is owing"; fro, deu, did, p ...

bonded warehouse
), 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 A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity In law, a legal ...
). 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.


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 ve ...
, 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 retailing, retail outlet that is exempt from the payment of certain local or national taxes and duty (economics), duties, on the requirement that the goods sold will be sold to travelers who w ...
*
Tax-free shopping Tax-free shopping (TFS) is the buying of goods in a foreign country 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 A sales tax is a tax pa ...


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