Watches of Switzerland Group has welcomed news that the Treasury has ordered a cost-benefit analysis of reinstating VAT rebates for foreign visitors to the UK.
Countries in the European Union offer instant rebates of sales tax charged on luxury goods like watches, but Britain withdrew from the scheme as part of its Brexit agreement.
The so-called Tourist Tax makes it 20% more expensive to shop in the UK compared to on the Continent.
If VAT rebates are reintroduced, not only would retailers benefit from wealthy tourists coming in from Asia, the Middle East and America, it would also mean visitors from the European Union would get their 20% VAT back.
Watches of Switzerland Group reconfirmed its 3rd quarter financials this week, which were unchanged from its statement on January 18, but added a brief note about the Tourist Tax in its outlook for the rest of this year.
“We are encouraged by the UK Office for Budget Responsibility’s review of VAT free shopping for tourists; we have not included its reintroduction into our guidance,” the company states.
The Centre for Economics and Business Research said the removal of tax-free shopping was costing the UK economy £10.7bn a year and deterring 2 million tourists from visiting.
350 business leaders, including heads of BA, Marks & Spencer, Harvey Nichols, Primark, Jigsaw, Kurt Geiger, Heathrow, Gatwick, Burberry, and Mulberry have been campaigning for the reinstatement of VAT-free shopping.
Within the CEBR report, WoSG CEO Brian Duffy says: “This evidence is even more compelling than I anticipated. It is simply irresponsible of the Government not to give this full consideration. We are aware from our brand partners and published data that tourist spending is bouncing back in the EU in a way that is simply not happening in the UK, and this is all down to the absence of VAT-free shopping.”