The U.K. plans to bring back tax-free shopping for international visitors as the country looks for ways to revive its slumping retail sector.
The country had put an end to tax-free shopping at the end of 2020 as it was seen as a costly relief that mainly benefitted retailers in London and was susceptible to fraud. However, the loss of sales from international visitors led luxury brands and retailers such as Burberry and Harrods to call for the reintroduction of the system.
“Britain welcomes millions of tourists every year, and I want our high streets and airports, our ports and our shopping centers, to feel the economic benefit. So we have decided to introduce VAT-free shopping for overseas visitors,” Finance Minister Kwasi Kwarteng told parliament during his mini-budget presentation.
The new tax-free system is expected to be implemented “as soon as possible,” and it will replace the previous paper-based system with a digital one, Reuters reported.
The revival of tax-free shopping will likely help U.K. businesses improve their competitiveness in attracting international shoppers, according to Linda Ellett, KPMG’s U.K. head of consumer markets, retail, and leisure.
“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.