London to reintroduce VAT refund for tourists

The possibility for tourists to make VAT-free purchases had been removed with Brexit.

The British government announced on Thursday its intention to once again allow tourists to make purchases without VAT, a possibility which had been removed with Brexit, to boost trade. The measurement "will boost department stores and create jobs in the retail and tourism sectors", according to "plan for growth» unveiled Friday by the British Chancellor of the Exchequer Kwasi Kwarteng.

The new program will be fornon-British visitors to Britain" and he "will allow them to obtain a refund of VAT on goods purchased in shopping streets, airports" and other points of exit from the country, provided they are transported outside the United Kingdom "in their personal luggage“, said the government on Friday.

People visiting the European Union without residing there are authorized to make purchases there free of VAT, or to be reimbursed for this tax, a system from which department stores and luxury boutiques in particular benefit. The UK ended this system when it left the EU in January 2021, much to the chagrin of tourism and retail professionals.

Towards entry into force in 2024

The British government said Friday to launch a public consultation on how to set up this device, which it says it wants to start "as soon as possible". According to documents released Friday after Kwasi Kwarteng's budget presentation to the British Parliament, the measure could be put in place in 2024, at the cost of a cut in state revenue of nearly 1.3 billion pounds for the first year.

The British Chambers of Commerce welcomed the return of this measure, which they demanded. "International tourism is a vital part of the UK economy (...) particularly in the hospitality sector“Reacted in a press release their general manager, Shevaun Havilland. The VAT refund "will provide a much-needed boost to retail, hospitality and other sectors that rely on tourist footfall to sustain their income“, abounded the City of London Corporation, which represents the business district of the British capital.

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