The decision to scrap a VAT exemption for travelers to the U.K. will be felt most by the country’s luxury retailers, which are largely dependent on Chinese and other international customers now subject to a 20% tax on purchases.
Of all the policy miscalculations of former U.K. Prime Minister Liz Truss’ short-lived government, the decision made by Jeremy Hunt, the new Treasury Chief, to backtrack on his predecessor’s move to scrap Value Added Tax (VAT) for tourists, could be one of the least appreciated by the country’s struggling retail sector.
Marking the third 180-degree turn on the issue since 2020, when the then-Chancellor Rishi Sunak ended duty-free shopping in a bid to raise extra funds for his pandemic-era job protection schemes, U.K. retailers argue that the latest decision to tax foreigners on their purchases will have a negative impact on sales.
Source: www.pymnts.com
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