Should VAT-free shopping come to an end?

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The government plans to end VAT-free shopping for international visitors to the UK at the end of the year, major retail players like Selfridges, Heathrow and Marks and Spencer have warned the government that the UK could lose billions of pounds in lost income and it could but 70,000 jobs at risk.
Under the VAT Retail Export Scheme (VAT RES), international visitors to the UK can reclaim the VAT they pay on goods purchased but not consumed in the UK.

“Earlier this month the government said it would abolish VAT RES on 31 December, when the Brexit transition period ends, arguing it offered little benefit to many parts of the UK and was inconsistent with international norms.
The Association of International Retail (AIR), urged the chancellor to look again at this devastating decision. It warned the UK will become the only European country not to offer VAT-free shopping for international visitors.”

Retail is still struggling to recover and survive the COVID-19 pandemic, but this looks like another headache they are going to have to deal with.

According to Visit Britain, £6bn is spent in the UK from international visitors, of which 2.5bn VAT is reclaimed.


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