With the immense growth in online shopping and the ability by most people to buy items tax-free from the comfort of their own home, it may seem that the days of seeking out bargains through duty-free stores would be over.
Somehow, those hours spent waiting at the airport in between flights compels many a traveler to pass the time with some retail therapy. Depending on what you buy and where, you can still save quite a bit of hard-earned cash if you know where to look.
Traditionally travelers have mainly sought to purchase items that that incur high levels of duty like alcohol, cigarettes, fragrances/cosmetics and electronics, and generally these are the items that will give you the best value for your dollar in duty-free stores.
Many a cruise ship passenger has discovered the duty-free joys of several Caribbean islands. In particular, the U.S. Virgin Islands offer outstanding savings on many of the quintessential duty-free items. Alcohol prices are so low that you may find yourself dreaming up ways to start an amateur smuggling operation. Electronics and watches are generally well priced and bargains can be found on a number of useful toys from digital cameras to iPods. For women who are tired of paying department store prices for make up and perfumes, the duty-free prices of major cosmetics lines in St. Thomas and St. Croix represent a savings of between 30% and 50% off retail, so stock up. The best part is that you don't have to wait until you get to the airport or cruise departure port, as all stores on the islands provide duty-free shopping.
There are several other Caribbean tax havens including the Cayman Islands, the Bahamas, Barbados, St. Maarten and Aruba, where you can shop throughout your vacation.
The United Arab Emirates (UAE), and more specifically Dubai International Airport, is regarded as the one of the best duty-free options in the world. In particular, gold jewelry is extremely well priced in Dubai and the selection is vast. Some travelers even go to the extreme of choosing an itinerary that flies via Dubai in order to take advantage of the pricing.
Perhaps the cheapest duty-free in the world for alcohol and tobacco would have to be at the international airports of New Zealand. Taking into account the relatively low New Zealand dollar and the abundance of local product available (New Zealand wines come to mind), if you're heading down south, make sure you have enough room in your carry-on luggage for a few bottles of New Zealand's finest, or maybe a flavored vodka or two.
Likewise, Australian airports offer considerable discounts on alcohol, cosmetics and tobacco, based on the high duty that the Australian government imposes on these products. In the case of Australian wine though, you would still be better off purchasing it in a retail store than buying it duty-free -- plus if you spend over $300 in one store in a single day and leave the country with the products in your hand luggage, you can claim the Tourist Refund Scheme (TRS) that lets you claim a cash refund at the airport of the goods and services tax (GST) of about 10% and wine equalization tax (WET). Avoid purchasing electronics though, as the prices are considerably lower both in Asia and the United States.
Asian airports also offer great selections of duty-free shopping and most offer low prices compared to local retail. However in places like Thailand, Malaysia, Indonesia and Hong Kong for example, where bargaining while shopping is part of the cultural norm, you'll find that prices of alcohol and cigarettes will be lower in city retail stores than at the airport, whereas higher priced luxury goods, like designer handbags and watches will be well-priced at the airport. Also you can usually be assured that alcohol prices in Muslim countries' duty-free stores such as Malaysia and Indonesia will be comparatively high, possibly to discourage consumption.
Singapore airport is a standout duty-free experience in Asia as it features a wide selection of products and has considerably cheaper luxury goods than its city counterparts. Items such as electronics, watches, cameras etc, can be snapped up at around 30% less than retail, sometimes less. Hong Kong does not impose any duties or taxes on any goods except tobacco and alcohol so purchasing an item other than these supposedly "duty-free" is a fallacy. At Kuala Lumpur Airport, specialized locally produced luxury goods like Selangor Pewter are up to 50% off retail and represent great value.
Since the formation of the European Union, duty-free stores have dwindled down to a handful of reasonable outlets in the airports of European cities. As Europeans and visitors alike no longer have access to duty-free shopping whilst traveling within the confines of the Union, you can really only make your purchases at your final European destination prior to departing Europe. That fact, in conjunction with the prohibitively high Euro and British Pound, makes any European duty-free purchase unlikely to save you money. One exception is London Heathrow Airport, where despite the inflated Pound, you can still find bargains on select luxury goods. As a visitor to Union member countries, you are eligible for a refund on your VAT (Value Added Tax; see our recent article) on many of your purchases so be sure to request VAT Refund information specific to each country and to apply for cash or credit card refunds at your final European departure airport.
Almost all international airlines and cruise ships offer their passengers the opportunity to purchase duty-free items on board during the flight/cruise. In general, these prices can be slightly higher than at an airport outlet, and often the selection will be narrower. On occasions though, high-end alcohol prices can be lower, especially if the airline/cruise line is having a "special" on select items.
If you want to seriously indulge in duty-free shopping and have major purchases to make, it is advised that you do your research before you travel. With the size and competitive nature of the U.S. retail industry, some of the best discounts on larger ticket luxury items can still be found at home. For smaller products like alcohol, cosmetics and cigarettes, duty-free may provide some big savings. Also if you are flying the same airline for more than one leg of your trip, take the in-flight magazine with you and compare prices of the duty-free items you are interested in with those at your next destination's airport.
Also it is essential to be aware of U.S. Customs regulations when it comes to duty-free exemptions and what products are not allowed to be brought back to the U.S. (i.e. Cuban cigars). In November 2004, U.S. Customs doubled the allowance from $400 to $800 for duty-free items purchased overseas. Despite this doubling, only one liter of alcohol and 200 cigarettes or 100 (non-Cuban) cigars may be included in this exemption. If the value of your total purchases exceeds $800, then duty will be imposed. Visit www.cbp.gov for further information.
