How much does it take to understand Duty Free? What is the difference between Tax-Free and Duty Free?

Published by The Duty Free Advisor: Editor on 2013-04-20

In simple terms, it can take a great deal to understand Duty Free and Tax-Free Shopping. Buying on your travels is not always so easy, due to the various rules, regulations and difficulties you can experience in terms of baggage and security. Not to mention, tax, duty-free customs allowances and the exchange rate difference. This is before you get into the various product ranges, such as perfumes, cosmetics, jewellery, tobaccos, alcohol and gifts.

Some of the most important criteria, so to understand duty free shopping, are detailed below. If you follow these guidelines, you should be ok.

Customs Limits and Allowances: Check before you fly, literally. Make sure you know what you can take in to your destination and what you can bring back. This includes whether you are actually on an international journey. Some sectors of your trip may be domestic, so you will not be able to buy tax-free in these places.

Baggage Allowances: If you are travelling by road and crossing a border, this section is not for you as you won't have any baggage problems. But, if you are flying or even Cruising, modern day airline baggage rules can make your life an expensive pain.

Duty-Free: A confusing description used in many different ways in different locations. To simplify, products like tobaccos, liquors, wines and spirits have both "Excise Duty" levied on them, which is a special tax for these products, but also "Tax" which is often known as Value Added Tax, Sales Tax or GST. So "Duty Free" describes the sale of these product ranges in a location where these two taxes are deducted from the selling price.

Tax-Free: Is the name given to the sale of other products that do not have special Excise Duties on them. Products like perfume, cosmetics, watches, jewellery or food products only have sales taxes levied on them, so when they are sold in international travel locations, this tax has already been deducted from the selling price.

Tax-Free Shopping: This normally refers to shopping when you are outside a travel location, like a ship, airport or flight and in a normal store when you are abroad. This should really be called "Tax-Refund Shopping" as this is what it is. When you travel and go to some regular shops abroad, you can buy the goods tax-free, but you have to recover this tax by reclaiming it when you leave the country. These goods are not sold with the tax already deducted, there is a Customs procedure you need to follow to obtain the refund.

Cigarettes & Tobaccos: If you are a smoker, buying duty-free cigarettes is a bargain, whether you want to buy 200 Benson & Hedges Gold, 400 Marlboro or more, prices are way below most domestic markets. But, be careful as more and more countries are restricting the importation of duty free cigarettes. For this reason you must check your inbound Customs Allowances, Exemptions and Limits at your arrival destination before you buy. Otherwise you may find that you cannot take duty-free cigarettes, cigars or tobaccos into the country.

Discounts on Duty Free: Whether it is Tax-Free or Duty Free, knowing what to buy is allways difficult. This is more complicated as it all depends where you live, the prices at home and the exchange rate you will receive for your money. The best advice here is to compare duty free prices before you leave home, so to find out what you will save. More airport Retailers now have an online Duty Free and pre-order site, almost all international airlines publish their dutyfree catalogue and prices online. Cruises and Ferry boats are not yet so advanced, but if you are shopping downtown or when crossing a border all the products and prices can be found.

Customs and Security: Many people get confused with these two different issues and it is important to understand how the system works. Firstly, Customs Officers do not confiscate duty free liquid goods because you have infringed security matters and Security Staff do not confiscate goods because you have infringed the different duty free Customs regulations. Security has no jurisdiction over Customs matters, whereas Customs "run the show" so to speak and they can take your goods if they believe you have broken the rules, one way or another. But, Customs do not (generally) monitor the carrying of duty-free liquids through airports in sealed "STEB" bags or normal plastic bags, this is a matter for security and these security rules are determined by the National Transportation and Security Departments and/or the airports or airlines who enforce the rules, but not Customs.