Duty-Free Shops

Over spring break I spent some time traveling.  In doing so, I came across some duty-free shops in one of the airports and those piqued my interest.  I decided that I wanted to learn more about these duty-free shops.  What follows is my findings.

Duty-free stores are stores that sell products tax/duty free on the condition that the purchaser is taking the product out of the country of purchase.  Duty-free shops have been around since 1947.  The laws surrounding this practice of tax/duty free sales relates to international trade, where many countries allow for the tax-free export of goods.  Because goods being bought by internationally traveling passengers will be used outside of the country of purchase, it they can be considered to be exported goods.  As such, they are subject to tax law regarding exports and thus exempt from taxation (1).

In the United States of America, your duty-free exemption is dependent on some factors such as what the product is, what countries you have brought goods back from, etc.  Generally, that exemption is $800 but can be as high as $1600.  Some exceptions to this include alcohol and tobacco, as there are limits on the quantities of these items that can be brought back duty-free.  From cbp.gov:

The duty-free exemptions ($200, $800, or $1,600) apply if:- The items are for your personal or household use or intended to be given as gifts.-They are in your possession, that is, they accompany you when you return to the United States. Items to be sent later may not be included in your $800 duty-free exemption. (Exceptions apply for goods sent from Guam or the U.S. Virgin Islands.)- They are declared to CBP. If you do not declare something that should have been declared, you risk forfeiting it. If in doubt, declare it.- You are returning from an overseas stay of at least 48 hours. For example, if you leave the United States at 1:30 p.m. on June 1, you would complete the 48-hour period at 1:30 p.m. on June 3. This time limit does not apply if you are returning from Mexico or from the U.S. Virgin Islands. (See also the section on the $200 exemption).- You have not used all of your exemption allowance, or used any part of it, in the past 30 days. For example, if you go to England and bring back $150 worth of items, you must wait another 30 days before you are allowed another $800 exemption. (See the section on the $200 exemption.)- The items are not prohibited or restricted as discussed in the section on Prohibited and Restricted Items in the "Know Before You Go" If you would like a hard copy of the publication, please order it through the Publications section of our Web site.

 (2).

So, duty-free shops exist as a form of international trade and here is a finite amount of purchases that can be claimed duty-free in a period of time.  This concludes my research into duty-free shops.