Once you’ve checked in for your flight and made it through security, chances are you have some time to kill. For many international travellers, that extra time is a special bonus, because it allows time to explore the duty-free shops.
If you are new to international travel, you might be wondering what all the fuss is about when it comes to the duty-free shop. Or maybe you’ve passed by, thinking that it’s a randomly located perfume shop. In reality, duty-free shopping can save you some money on certain items — if you know how it works.
The concept of duty-free shopping originated in Ireland in the late 1940s. Shop owners realized that when a traveller was in the terminal between passport checkpoints, they were technically between countries — and thus exempt from paying taxes. Travellers flocked to the duty-free shops to purchase items that were heavily taxed in their home countries, such as cigarettes, alcohol and perfume.
Today, the trifecta of tobacco, alcohol and perfume are still the mainstays of duty-free shopping, but many shops sell other items as well — often luxury goods and cosmetics. The shops’ prices are lower because they do not include Goods and Service Tax (GST) or Value Added Tax (VAT) in the price. In addition, if you buy items at a duty-free shop, in most cases you won’t have to pay customs fees to bring the items into your home country, making your cheap flight overseas or into the U.S. an even greater bargain.
Deal or No Deal?
In the past, duty-free shops were a clear winner in terms of prices. These days, getting a great deal requires doing your homework, and not assuming that just because something is in the duty-free shop, it’s a good deal.
Duty-free shops tend to be the best bargain for those from countries with high VAT or GST rates, such as Sweden, which charges a 25 percent tax on most goods purchased in the country. Canada, on the other hand, has one of the lowest VAT rates in the world — currently five percent — meaning you won’t see truly significant savings by purchasing items in the duty-free shop and importing them into Canada.
Another factor impacting duty-free shops is exchange rates. When the Canadian dollar is strong, you’ll score a value. Before making a purchase, calculate what the actual cost of the item is in your own currency to ensure that you’re actually paying less than you would at home.
That’s not to say that you won’t see any savings when you browse the duty-free shop. Many shop management companies make an effort to keep their prices below those of the “street” prices in the area; a bottle of designer perfume might be sold for up to $25 less in the duty-free shop than in a local department store, simply because the airport shop wants to remain competitive.
But Wait, There’s More!
Before you embark on a shopping spree at the duty-free shop, you should know that there are some restrictions. In every case, to shop at a duty-free store, you must have proof that you are either leaving the country or returning from another country.
Depending on where you are going, you could face significant restrictions on the amount that you can bring in to the country — including Canada. The amount of alcohol or cigarettes you can bring into Canada after being out of the country depends on how long you’ve been gone; if you were out of Canada for longer than 48 hours, you can bring in larger quantities than if you were gone for less than 48 hours. In either case, the limits are strict, and purchasing more than the allowed amount could lead to significant charges that will negate any savings.
And if you are purchasing items at the duty-free shop at the airport before you leave Canada, you might be subject to taxes and fees anyway. For example, visitors to Singapore must pay taxes on cigarettes regardless of where they were purchased. Most duty-free shop personnel are knowledgeable regarding restrictions and can help guide your purchases to avoid facing extra charges.
A visit to the duty-free shop can be an enjoyable part of any international trip, if for no other reason than to compare prices and check out the designer goods available for sale. But before you hand over your credit card, do your homework and be sure that you’re getting the best deal possible.
About the Author: Toronto-based writer Lucy Bertrand remembers exploring duty-free shops as a child each time her family would make a trip to England to visit relatives.