Retailers and the hospitality industry welcomed the expected return of VAT-free shopping for international tourists, saying it would help boost sales.
The government said it will consult on introducing a new tax-free buying scheme for Britain and modernize the one in force in Northern Ireland.
The program will allow tourists to obtain a VAT refund on goods purchased on main roads, airports and other departure points and exported from the UK in their personal luggage.
The move, which will cost nearly £ 1.3 billion in 2024-25, when it is likely to be introduced – according to government documents published alongside Kwasi Kwarteng’s mini-budget on Friday – cancels the scrapping of the VAT exemption regime. long-term in January 2021 by former Chancellor Rishi Sunak after Brexit.
The government said a consultation “will gather views on the program’s approach and design” before it is delivered as soon as possible.
Retailers, particularly at major tourist spots like central London, have long called for the program to return, saying its loss had led tourists to choose to spend more elsewhere.
Helen Dickinson, managing director of the British Retail Consortium, which represents most of the major retailers, said: “We welcome the reintroduction of tax-free shopping for tourists, which will increase sales and bring the UK back in line with other nations. European “.
But he added that the government hasn’t taken any measures to address the burden of corporate rates, the property tax that retailers say prevents them from competing with online specialists like Amazon.
“Retailers are facing enormous cost pressures, not only from energy bills, but also from weak pounds, rising commodity prices, high transportation costs, a tight labor market and the cumulative burden. government-imposed costs, “Dickinson said.
“However, what was missing from today’s announcement was any hint of corporate rates, which are set to rise 10% next April, inflicting another £ 800 million in unsustainable tax increases on already crushed retailers. It is inevitable that these additional taxes will eventually be passed on to households in the form of higher prices. “
Kate Nicholls, managing director of UKHospitality, the commercial body representing restaurants, bars and hotels, added: “Although tax-free shopping for overseas customers is a welcome step in attracting foreign tourists, a much more immediate step would be to reduce VAT for our domestic customers.
“Our VAT rate is the highest in modern economies, so if we want a globally competitive market, we need lower VAT and a fair alternative to corporate rates.”