Duty Free Question?

[stephaniemason0316]

Ok, so I am new to cruising and will going on my first one April 26th 2009. What does it mean when people say the shops are "duty free".

[RoofingPrincess]

From Wikipedia:

Duty-free shops are retail outlets that do not apply local or national taxes and duties. They are often found in the international zone of international airports, sea ports or onboard passenger ships. They are not as commonly available for road or train travelers, although several border crossings between the United States and Canada have duty-free shops for car travelers.

Legal basis: It is a common feature of most tax systems that taxes are not raised on goods to be exported. To do so would place the goods at a disadvantage to those from other countries. Either the tax system allows the goods to be exported without taxes (stored prior to export in a bonded warehouse), or taxes can be claimed back when they are exported (see VAT).

Such exemption also applies to goods supplied for use on ships and aircraft, because they are consumed outside the country. Businesses supplying such goods can do so tax- and duty-free.

Goods sold to passengers on board ships or aircraft are tax free. The passenger can either consume them on board, or import them tax-free into the country they are travelling to, so long as they are within the traveller's Duty-free allowance. Most tax regimes also allow travellers entering a country to bring in a certain amount of goods without paying tax on them, the so-called "duty-free allowance"; because it is not economically justifiable to collect the small amounts of tax involved, and would be an inconvenience to the passengers.

A duty-free shop works under the same system. The goods must be exported intact (they cannot be consumed in the airport), and they are importing into the destination country under that country's own tax rules.

 

Here's a link to the full text if you'd like to read it:

http://en.wikipedia.org/wiki/Duty-free

 

In a nutshell, the goods are cheaper in a duty-free shop because they have not had the import taxes added on to the price, and as long as your purchases fall within the guidelines of the duty-free allowance, the government will not collect said taxes.

[kitty9]

To add to the above post, which is great, Duty Free does NOT mean that you don't have to declare your purchases to US Customs and not pay duty if you've exceeded your limit. A lot of people confuse that term thinking that they don't have to include duty free items on your Customs forms.