Imagine this: you’re strolling through the airport – passport in one hand and boarding pass in the other, when suddenly you come across the glowing shelves of a duty-free shop. Neatly lined bottles of the world’s most exclusive whisky, rum, and what not invite you with a price tag that is…not expensive at all? Yes, these price tags come with a friendly price that makes you contemplate whether that vodka you purchased was indeed a smart decision or just one of your impulse purchases. Let’s understand the logic, science, and everything else about duty-free (and whether it helps you save money).
The million dollar most of you came here to seek the answer to: ‘What does duty-free even mean?” Well to begin with, duty-free refers to the act of being able to purchase an item without paying import, sales, value-added (VAT), or other taxes. Duty-free retail businesses sell merchandise that is exempt from duties and taxes. This is because the purchased products are sold under the intention that they'll be taken out of the country for use.Before getting into what it is all about, let's focus on what the word "duty" actually means. In this case, it refers to the taxes — either import, sales, value-added (VAT), or local — that you must pay to bring a product across international borders.Essentially what this means is that you are expected to pay taxes whenever you purchase an item in the original country. When you enter another country with this item, you’ll be expected to pay a separate tax for the same.However, when you’re buying something in a duty-free store, it means that you’ll not be expected to dish out all those different taxes. These shops are majorly at international airports, sea terminals, and on-board cruise ships. From perfumes to chocolates and luxury bags and of course, alcohol, there are plenty of goods to choose from!Simply put: ‘Duty’ is the fee you pay to transport a product across international borders. And ‘duty-free’ is when you simply don’t have to pay those fees!Also Read: Flying With Alcohol? Here Are Alcohol Rules For Domestic Flights
Under ordinary circumstances, host countries expect you to pay an import, sales, value-added (VAT), or local tax on goods you buy. However, when shopping in international airports, sea terminals, onboard cruise ships, and during international airline flights, your purchase is made in no man’s land.
Hence, you are neither in nor out of any particular host country, including the one in which the terminal is located. No man’s land status is a justification for shielding you, as a passenger in transit, from host country taxes.As mentioned earlier, when you purchase an item in another country, you’ll be expected to pay an import, sales, VAT, or local tax on goods you buy. However, when you shop at international airports and other such places mentioned above, you’re purchasing items in a no man’s land.Since you are either entering or leaving from one country and moving to another, the products you buy at the airport in the origin country are sold duty-free. Remember that these products are only expected to be consumed in the destination country.Also Read: Dry In The Sky: 7 Airlines That Don’t Serve Alcohol
Yes, duty-free shopping is cheaper than retail prices. This is due to the elimination of import taxes, value-added tax, local tax, etc. On paper as well as in practice, it is comparatively cheaper than buying the same product outside a duty-free shop. This is mainly because when you purchase the same item in a non duty-free setup, you have to shell out extra taxes. When you purchase the item duty-free, you essentially save yourself all these exorbitant fees, making your product slightly cheaper. However, that doesn’t mean that it reduces the price of the actual product. You don’t pay for the additional taxes, but you still have to pay the complete price of the item! Also, prices can be influenced by the currency exchange rate or the location from where you’re shopping.Also Read: Hotel Communications Network Rolls Out In-Room Tablet Program For Alcohol Sampling In Hotels
A great way to save some additional bucks is to plan your purchases beforehand. You can skim through official websites of such duty-free stores or rely on websites like Shop Duty-Free. Websites of many duty free stores offer additional website discounts and promotional offers, making the purchase even cheaper. 
Goods like tobacco, luxury bags, and alcohol are often what attract most passengers in duty free shops. This is because they’re often some of the most heavily taxed products in the host as well as the destination country. Purchasing them at duty-free stores will save you a considerable amount of money.When purchasing items at duty free stores is to use a credit card with zero transaction fees. Also, accept the charge in the local currency and not the converted US Dollar rate. This is simply because the converted Dollar rate can be higher – and who would want to pay extra?
Duty free alcohol might look like a steal – and sometimes, it genuinely is. If you know your prices and buy smart, it can save you money. But remember that all that glitters in the airport terminal may not be gold. Prices can vary wildly depending on your departure and arrival countries, local market rates, and even the airport itself. Cheers to (informed) sipping!
Singapore’s Changi Airport is often considered to be one of the best places to get good deals on duty-free alcohol.
To be eligible for duty-free purchases, passengers must have a valid international boarding pass and a valid passport. Without these two requirements, you cannot shop at duty-free stores.
Only international travelers (and not even local airport staff) are eligible for duty-free shopping. They must present a valid passport and international boarding pass for duty-free purchases.
