by Chandler Harris
Stroll through almost any airport terminal today and you’re bound to find a duty-free shop, often selling a consistent array of liquor, cigars, cigarettes, cosmetics, electronics, and more. So what is the big draw to buying such things at an airport, especially liquor and tobacco products?
When buying duty-free you are actually taking advantage of a tax loophole that has become a precedent at most of the world’s airports. When you buy a product at a duty-free shop at an airport, you are, according to most tax laws, exporting the said item to another country and don’t need to pay a duty (tax). Some countries, including Australia, Brazil, and China, allow for duty-free purchases on arrival in their country.
And countries don’t usually want to tax exported goods since that would give businesses within a country a competitive disadvantage. So since tobacco and liquor are often taxed more than other items, they are more prominently featured at airport duty-free shops.
The Rules Behind Duty-Free
Travelers can’t necessarily buy any quantity of items at a duty-free shop. Laws allow for a “duty-free allowance” for each person that limits how much he/she can buy and export. The size of a duty-free allowance depends on a country’s laws. But as a rule of thumb, if you’ve spent at least 48 hours in a country, you can purchase up to $800 worth of duty-free items.
Each person can use this $800 of tax exemption once every thirty days. Yet if you’ve used this exemption to the fullest and traveled out of the country for at least 48 hours, you can get an additional tax exemption of $200. Or, if you go over your exemption, the first $1000 of net value will be taxed at 3 percent in most countries.
What do you Need to Declare?
A rule of thumb is that you need to declare anything you’re bringing back from another country that you didn’t take with you. And, you may need pay duties on those items once you get back home, if they fall outside your exemption. For more information on what you need to declare and how to declare it in the U.S., check out the U.S. Customs and Border Protection site on this subject.
What to Buy
The best deals are usually with tobacco and liquor products, since they are often more heavily taxed than other items. Different countries have different restrictions on alcohol, though with some limiting the amount to a liter.
Most cosmetic and skincare products sell for about 50 percent off the retail price, according to the BBC.
For luxury goods, such as perfumes, handbags, luggage, sunglasses, etc., prices can be very reasonable or even more expensive than standard retail prices. However, if you’re a savvy shopper the Huffington Post suggests researching online before traveling to find the best deals.
For additional resources to make the most of your travels, Travel and Leisure has a ranking of the best airports for duty-free shopping. Also, Duty-Free Addict allows you to compare products at the duty-free shops in 14 different countries.
With more than 10 years writing experience Chandler has worked for three different newspapers as a writer, columnist and editor in chief. He has written articles for numerous national magazines, as well as written and edited official government documents, press releases, Web content, brochures, white papers, performance briefs, concept papers and instructional manuals.