Understanding Tourist Refund Schemes and How to Maximize Them

When visiting international tourist destinations, some people get bitten by the shopping bug. Indeed, going abroad can make one curious about new environments and cultures. One way to satisfy this curiosity and learn more about the country you’re visiting is to buy some clothes, snacks, and souvenirs.

However, when you’re surrounded by so much unique merchandise, it can be tempting to buy them all. Fortunately, you can add more items to your shopping list while still staying within your budget if you know how to use tourist refund schemes effectively.

What are Tourist Refund Schemes?

Tourist refund schemes, often known as VAT refund schemes, allow travelers to reclaim a portion of the value-added tax (VAT) or goods and services tax (GST) on purchases made during their trip. Eligible items encompass a wide variety, from luxury goods and souvenirs to electronics and fashion.

The main reason why there are tourist refund schemes is to entice travelers to spend more while abroad. This then stimulates tourism and boosts the local economy. As such, numerous countries have tourist refund schemes implemented into their tourism programs. Some of these countries include:

Australia

Singapore

Japan

China

Italy

Netherlands

Thailand

Luxembourg

Keep in mind that tourist refund schemes don’t apply to every shop and purchasable goods in the country you’re visiting. To make the most of these opportunities, below are some things you can do.

Know How Much You Need to Spend

Just because you bought something doesn’t mean that your purchase will immediately be eligible to receive a VAT refund. Each country has different conditions for their tourist refund schemes, but one common requirement that you have to meet is the minimum purchase amount. Whether you’re paying in cash or using your credit card, you have to at least spend a certain amount to qualify. In Australia, you have to spend at least AUD 300 in total from participating stores. Meanwhile, in Thailand, you must purchase at least THB 2,000 worth of goods (for luxury goods, it’s THB 10,000). In Singapore, on the other hand, you have to spend at least SGD 100 to get a refund.

Each spending scheme also has its own set of mechanics, like meeting a maximum spending limit per day or store or reaching the limit by combining the accumulated amount from up to three same-day invoices. As such, it’s in your best interest to research the conditions of the tourist refund scheme of the country you’ll be visiting to give you a good idea of how it works.

Create a Strategic Shopping Plan

Once you know the mechanics of the country’s tourist refund scheme, the next step is to create a strategic shopping plan before you depart. Preparing in advance can help you make informed purchasing decisions, as well as create a shopping itinerary that fits your entire travel schedule.

When creating your shopping plan, you want to focus on researching products that are eligible for refunds and participating stores. This way, you can go straight to buying the items you want. Products that qualify you to get a travel tax refund are typically called standard-rated goods. These include:

Clothing and accessories

Electronics

Cosmetics and perfumes

Watches and jewelry

Home goods

Souvenirs and handicrafts

Luxury goods

In some countries, alcohol and tobacco products don’t qualify. VAT-exempted goods are also disqualified. Moreover, qualified goods may lose their eligibility if they’re opened and consumed in their country of origin or if you fail to claim your refund during a specific time frame.

Fortunately, stores that actively participate in tourist refund schemes are well-versed in the process. In case you have any questions, they can guide you to ensure that you have a fast and smooth refund experience. Some stores also have signs indicating that they participate in the tourist refund scheme, so you immediately know where to go.

Document Your Purchases

Before you can get your refund at the travel tax counters, you have to present the necessary documents to ensure a successful claim. These important papers include original receipts, invoices, and refund forms. Make sure that the details on these documents match those on your passport and other travel documents. In some countries, they’ll be looking for the business number on the invoice to ensure that the store you’ve bought the product from is registered under the tourist refund scheme.

Be Aware of Administrative Fees

While tourist refund schemes offer financial benefits, it’s important to be aware of potential administrative fees associated with the refund process. Some schemes may deduct a small percentage as a processing fee, so factoring these charges into your calculations will ensure you have an accurate estimate of your final refund amount. In the UAE, for example, tourists will receive 85% of the total VAT while the remaining 15% will be deducted as the administration fee.

With many countries implementing tourist refund schemes, shopping at international destinations will definitely be a fun experience. Keep these tips in mind so you can purchase a wide variety of goods and still be able to enjoy plenty of savings.