British Retailers Demand Return of Tax Free Scheme to Curb Financial Losses

The Association of International Retail (AIR) has been the latest body to step up its pressure on the British government to reinstate tax free shopping, which was cancelled in 2021 after Brexit, and which has meant millions of dollars in losses for the sector’s professionals.

According to the association, reinstating tax free would bring in around 3.7 billion pounds a year (almost $5 billion) to the economy, and would create around 73,000 jobs. Moreover, according to their calculations, the UK would become the “shopping capital of the world”, WWD reports.

The British association wants the government to reintroduce tax free as part of the tourist-focused economic growth plan that the administration will launch in the autumn. To this end, it has submitted an official document to the government with a proposal for VAT-free shopping.

British activists claim that reinstating tax free would position the UK as a shopping capital

VAT in the UK currently stands at 20%, something that pushes high-end shoppers to shop outside the country, to destinations such as Paris or Milan. Until tax free was withdrawn, the main shopping countries were China, Russia, the Middle East and the United States.

At the time, the Chancellor of the Exchequer, Rishi Sunak, took advantage of the UK’s exit from the European Union to put an end to this tax-free shopping system, and the governments that preceded him have agreed that the tax free system was costing the British coffers more than it was returning.

British retailers, for their part, argue that they have lost ground to countries such as France or Spain, which continue to offer tax free shopping to visitors from outside the European Union.

Pressure on the government has not abated in recent times. Mulberry, Fortnum & Mason and John Lewis sent a letter to the ministry last year calling for a resumption of the policy.

More recently, even Burberry’s CEO has come out in favor of the return of tax free. Following the announcement of its last fiscal year’s results, Josh Schulman indicated that “it would be a great opportunity for customers, stores and for the UK to become Europe’s premier shopping destination.“