How to Get a VAT Refund When Shopping Abroad

While travelling to foreign destinations, it is often enticing to do some shopping. You might have noticed that, like in India, you have to pay VAT for goods purchased in most of the foreign countries. But did you know that you can get the VAT amount (or at least a big chunk of it, back in the form of cash or into your account?)

 

Before we get into the details, first let us understand “what is VAT?” –

According to Wikipedia, “VAT or Value Added Tax is assessed and collected on the value of goods or services that have been provided every time there is a transaction (sale/purchase).”

Fun Fact – Did you know that VAT is implemented in as many as 160 countries around the world?

For instance, every country that falls under the Euro zone returns the amount that you had paid as VAT on your shopping in the form of cash, in your prepaid forex card, or your bank account. 

 

How do you get the VAT amount refunded –

The process to get the VAT amount back can be a little lengthy, but it is quite simple. Here is what you would need to do –

Step 1 –

Carry your passport along with you while going to a shop for shopping.

Step 2 –

Confirm with a salesperson whether or not VAT refund is possible or not.

Step 3 –

When making the payment using your Forex card or by cash, ask the salesperson to fill up the VAT refund form. You may have to pay an amount to get a VAT refund form, depending on the country.

Step 4 –

While taking the return flight, keep the receipts and VAT refund forms of all your purchases together. Get the VAT forms stamped at the Customs.

Step 5 –

Show it at the VAT Refund office stationed at the airport and that is it. You will get the VAT amount back in the form of cash, credit into your prepaid Forex card, or bank transfer (as per your choice).

Fun Fact: You can buy Forex card online through Buy Forex Online at no additional cost.

 

VAT schemes of various countries –

As mentioned above, there are 160 countries which have implemented VAT in their financial system. So, naming them all here would make this article never ending. 

The following is a list of 20 of the most visited countries in the world (as of 2018) by Indians (in no particular order) and their VAT which can be refunded –

Country

Vat

1. Singapore 7%
2. Thailand 7%
3. The United Kingdom 20%
4. Australia 10%
5. Malaysia 6%
6. South Africa 14%
7. China 17%
8. Germany 19%
9. The United States of America
10. Italy 22%
11. Norway 25%
12. Spain 21%
13. Turkey 18%
14. France 20%
15. The Netherlands 21%
16. Canada 5%
17. Vietnam 10%
18. New Zealand 15%
19. Saudi Arabia 5%
20. Indonesia 10%

If you want, you can check out the VAT schemes of all the countries on Wikipedia List of Countries.

 

Let us consider an example –

Note – I did not lose much money on currency exchange either as I was carrying a prepaid Forex card that I had purchased from Buy Forex Online. The exchange rate was great.

In addition to that, with two free ATM withdrawals, my overall withdrawal fees was way less than it would have been had I used some other card. Click here for online Forex purchase or to buy a Forex card online.

 

Last year, when I visited Malaysia, shopping was always on my mind. Considering that Kuala Lumpur is a shopping hub, it would have been rather stupid of me if I would not buy any electronic gadget – most of which are fairly expensive in India.

While exploring one of the malls in the city, I noticed an outlet which highlighted ‘VAT Free Shopping’ below its name. Curious, I asked a salesman inside the shop about it. He told me that whatever I purchase from the store, I will get the VAT amount refunded.

For someone not aware of such thing, that got me enticing. Next I knew, I was looking for more such outlets inside the mall. I found many, but one stood out for its pricing.

I bought a GoPro for myself, which had cost me MYR 1495 (roughly INR 22,500 (in 2017)) using my prepaid Forex card. The amount, by the way, was inclusive of VAT. I was informed beforehand that I will get back 5% of the total amount if I fill up the VAT refund form.

The next thing I knew, I gave them my passport so that they could get a photocopy of it. And after carrying out certain procedures, they handed me the receipt and the attested refund form.

Prior to the departure of my flight, I visited the VAT refund office inside the Kuala Lumpur airport. The officer asked me how I would like to get the refund – cash or credit to my card. I opted for the latter. They credited the VAT amount that I had paid into my prepaid Forex Card.

While the same camera would have cost me INR 24,999 in India; in Malaysia, it had cost me less than INR 21,500, thanks to the VAT refund policy and online Forex purchase.

 

Points to Remember –

  • In most countries, you have to spend a minimum to avail VAT refund.
  • Make sure you check that the VAT refund form is properly stamped by the store.
  • If you are going to make multiple purchases from a particular mall on different days, you may get the form prepared on the last day – saving yourself the trouble of redundancy.
  • Do not forget to carry your passport while going for shopping. It will be needed for VAT refund form.
  • Not all products are applicable for VAT refunds. It depends from country to country.

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