The Strategist

UK ponders canceling tax free system

09/22/2020 - 03:38

The plan of the UK authorities to cancel the tax free system on December 31 drew sharp criticism from the tourist industry, BBC News reported on Monday.

Photo by DAVID ILIFF. License: CC BY-SA 3.0
Photo by DAVID ILIFF. License: CC BY-SA 3.0
"The government's plan to end the tax free system for foreign visitors from 31 December could cost the UK billions of pounds in lost profits. 70,000 jobs will be at risk," the portal writes, citing a letter from the heads of Marks & Spencer, Heathrow and Selfridges to the country's leaders.

As noted, tourists from non-EU countries made purchases in the UK in the amount of 3.5 billion pounds annually, from which they then received a tax refund. The authorities of the country decided that the monetary losses were too tangible, in addition, there are "many opportunities for fraud."

"Tourists came to London and Edinburgh en masse to make good purchases. If VAT refunds are canceled, the UK will become the only European country without a tax free system. This will deal another blow to the tourism industry affected by the pandemic, travelers will easily go shopping in other countries and cities - Paris, Milan, Madrid," wrote the businessmen.

Foreign tourists spent £ 6bn shopping in the UK in 2018, according to VisitBritain. At the same time, purchases in the amount of 3.5 billion were subject to tax free deduction, but in reality a VAT refund was issued for purchases worth 2.5 billion.

At the moment, in the UK, a tax free deduction can be obtained on purchases worth 30 pounds, the amount of VAT in the country is 20%. Items purchased in this way must not be used in the UK.