UK loses buyers to Chinese Shopping
08-09-23
Chinese tourists’ lack of spending is costing the UK an estimated 750 million GBP (94 million USD) a year, according to new research from Oxford Economics and the Association of International Retail (AIR).
The report evaluated the fiscal impact of the UK government’s decision to scrap tax-free shopping as part of its withdrawal from the European Union. The Tax-Free Shopping scheme, introduced in compliance with EU regulations, enabled non-EU visitors to reclaim VAT paid on their purchases.
The scheme ended in January 2021, making the UK the only European country without a tax-free scheme for international visitors. The policy was slated to be reintroduced in 2022 but was again abandoned due to HM Treasury estimates that it would cost the Exchequer 1.3 billion GBP (1.63 billion USD) in the fiscal year 2024/25, increasing to 2 billion GBP (2.5 billion USD) in 2025/26.
The AIR report found this estimate was significantly overstated and that the reintroduction of the scheme would attract 1.6 million visitors to the UK and stimulate an extra 2.8 billion GBP (3.52 billion USD) in tourist spending.