Visit Ukraine is initiating legislative norms for the introduction of tax free (the return of part of value added tax (VAT) to foreign tourists who have made a purchase abroad) status, founder of Visit Ukraine Anton Taranenko has told Interfax-Ukraine on the sidelines of the RAU Investment Forum.
“Ukraine is the only European country where there is no tax free option for tourists. This reduces the attractiveness of shopping tourism to our country,” he said.
At the same time, the potential of such a mechanism is significant; it has been effectively operating in the world for 40 years. According to Taranenko, from April 1, 2020 to March 30, 2021, 35 million tax free transactions totaling EUR 18.5 billion were carried out in stores around the world.
Despite the lack of such an option, among the reasons why foreign tourists still go to Ukraine, shopping is one of the priorities. As an example, Anton Taranenko cited the “Arab case” of this summer.
“Over three months, 42,000 tourists from Arab countries visited Ukraine. The average spending was higher – $200 per day. In general, they spent $34 million, of which 25% or $8.5 million were shopping expenses,” Taranenko said.
The expert stressed that the retail sector should be ready to increase the share of foreign tourists among buyers.
“The time has come for an active position of all interested parties, including retail. The shopping and entertainment centers should attract staff with knowledge of the languages of top customers: English, Arabic, Chinese; launch campaigns aimed specifically at such buyers; participate in tourism exhibitions and much more,” Taranenko says.
Tax free shopping is a VAT compensation system for foreign tourists who have made purchases abroad. The amount of compensation is from 5% to 23%, depending on the amount of VAT and the tax free operator’s fee.
