10 Best Tax-Free Shopping Meccas

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Kelly Kollar

There are times when looking like a tourist is smart advice-especially when an overseas shopkeeper asks travelers if they'd like a VAT (Value Added Tax) receipt to qualify for a tax refund.

There are times when looking like a tourist is smart advice-especially when an overseas shopkeeper asks travelers if they'd like a VAT (Value Added Tax) receipt to qualify for a tax refund.

Such rebate programs, available only to nonresidents, are commonplace in Europe. But there are a growing number of countries around the world where travelers can also get a refund. (See the slideshow of what to buy where below.)

Singapore kicked off the refund trend in Asia in 2004, and was soon followed by Indonesia, Japan, South Korea, and Thailand. Unknown to many travelers, Mexico began offering tax refunds in 2008 (just a year after Canada canceled its rebate program for individual travelers).

VAT and GST (Goods and Services Tax) place the tax burden on the end consumer, chargeable in the place where the merchandise is used. In many places, purchased goods taken out of the country by nonresidents aren't subject to the VAT/GST, which ranges from 5 percent in Japan to 25 percent in Sweden, Norway, and Denmark.

Even so, travelers usually have to pay the tax, at least temporarily, when buying an item. That's why travelers need to file the appropriate papers for a refund on the way home.

There are procedural nuances from place to place, but the basics are the same around the world. Buy goods from an authorized tax-free-shopping merchant. Make the minimum required purchase (as low as $17 in Argentina, as much as $300 in Australia), if there is one, and have the clerk fill out the necessary tax forms. Bring a passport for identification.

At the airport, show the goods to the Customs Office before going through security, and have tax forms stamped. Passengers can then pack the goods into their luggage and check in (except in Australia, which requires carry-on of these purchases, apart from wine and oversize items). After passing through security, submit the forms at a tax-refund kiosk for an immediate refund or to have a check mailed home.

Beware, though, that many countries charge a commission on refunds. If passengers want the refund credited to a charge card, expect to pay $4 in South Africa. Israel has a sliding commission scale, ranging from as little as 5 percent to a high of 15 percent, depending on the refund amount. Mexico charges a whopping 35 percent commission.

No matter where people do their tax-free shopping, remember:
• Find out the minimum purchase requirement, if any, for a single item or total amounts, as well as the step-by-step procedures. Get details on dozens of countries from tax-free-shopping operators premiertaxfree.com and global-blue.com.
• Look for merchants' signs or window stickers that say Tax-Free Shopping or VAT Refunds.
• Shop around. A lower price at a nonparticipating merchant might be a better deal than a higher price at a participating merchant, despite the refund.
• Travelers will almost always need to show your purchases to a Customs Officer at the airport or seaport.

A refund might not add up to much money after all is said and done. But the bottom line is whether travelers want that money to end up in their pockets or with the excise man.

11 PHOTOS
Best Tax-Free Shopping
See Gallery
10 Best Tax-Free Shopping Meccas (PHOTOS)

Things to Buy: Opal jewelry, Aboriginal art, sheepskin boots.


VAT/GST: 10 percent, included in price.


Separate WET (Wine Equalisation Tax) tax on wine: 14.5 percent.


Minimum Spend: U.S. $300 total in any single store within a 30-day period (no minimum spend required on any single receipt).

Insider Tip: Most countries exclude alcohol from rebates, but the Aussies will refund tax on wine. So bring some home. In fact, go wild and make it a case.

Refund on a $500 Purchase: $45.


Oriol Alamany / Alamy

Things to Buy: Batik, wood carvings.

VAT/GST: 10 percent, included in price.

Minimum Spend: 500,000 rupiah (U.S. $55) on a single receipt.

Insider Tip: Tax-free shopping is in its infancy here, so check the website for the limited list of participating stores.

Refund on a $500 Purchase: $45.


Katherine Rally

Things to Buy: Designer clothing, fashion accessories, fine art.


VAT/GST: 16 percent, included in price.


Minimum Spend: 360 new shekels (U.S. $100) on a single receipt.


Insider Tip: Purchases and receipt will be sealed in a clear plastic bag at the store. Don’t open it until at the airport to present it for a VAT refund or it will be denied.


Refund on a $500 Purchase: $69.


LOOK Die Bildagentur der Fotografen GmbH / Alamy

Things to Buy: Electronics, pearls, silk goods.


VAT/GST: 5 percent “consumption tax,” included in price.


Minimum Spend: 10,001 yen (U.S. $119) in any single store on any given day.


Insider Tip: VAT refunds are issued in the store where the purchase is made. Visas will be stamped accordingly, and visitors may be asked to produce the goods when leaving the country.


Refund on a $500 Purchase: $24.


Alamy

Things to Buy: Jade, leather products, handicrafts.


VAT/GST: 10 percent, included in price.


Minimum Spend: 50,000 won (U.S. $43) in total receipts.


Insider Tip: Antiques more than 50 years old can’t be exported without government approval.


Refund on a $500 Purchase: $45.


Wendy Connett / Alamy

Things to Buy: Jewelry, antiques, designer labels.


VAT/GST: 10 percent, included in price.


Minimum Spend: 150,000 pounds (U.S. $99) in any single store on any given day.


Insider Tip: Don’t wear or use purchases before departure or travelers may be disqualified from getting a refund.


Refund on a $500 Purchase: $45.


M Itani / Alamy

Things to Buy: Carpets, traditional dress, handicrafts.


VAT/GST: 20 percent, included in price.


Minimum Spend: 2,000 dirhams (U.S. $236) in any single store on any given day.


Insider Tip: Gemstones don’t qualify for refunds.


Refund on a $500 Purchase: $83.


Kelly Kollar

Things to Buy: Antiques, electronics, fashions.


VAT/GST: 7 percent, included in price.


Minimum Spend: $100 Singapore dollars (U.S. $76) in any single store on any given day (three receipts maximum per day).


Insider Tip: Singapore will introduce a new, simpler, electronic refund program in mid-2011.


Refund on a $500 Purchase: $33.


Asia Images Group Pte Ltd / Alamy

Things to Buy: Diamond jewelry, Zulu beadwork, animal skins.


VAT/GST: 14 percent, included in price.


Minimum Spend: 250 rand (U.S. $36) in total receipts.


Insider Tip: South Africa requires a lot of refund paperwork but has few restrictions on refundable items.


Refund on a $500 Purchase: $61.


Dook

Things to Buy: Tailor-made clothing, silk goods, jewelry.


VAT/GST: 10 percent, included in price.


Minimum Spend: 2,000 baht ($66) in any single store on any given day and a total minimum of 5,000 baht (U.S. $166).


Insider Tip: Small luxury items (watches, jewelry, etc.) valued at more than $330 must be reinspected after immigration check, so don’t pack them in checked luggage.


Refund on a $500 Purchase: $45.


Peter Treanor / Alamy

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