Question reference: S6W-25618
- Date lodged: 19 February 2024
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Current status: Answered by Shona Robison on 4 March 2024
Question
To ask the Scottish Government what its position is on the reported calls from the Scottish Retail Consortium and Scottish Tourism Alliance for a restoration of tax-free shopping for overseas visitors as a means of supporting Scotland’s retail and tourism sectors.
Answer
The Scottish Government does not have policy control over VAT rates or VAT exemptions. This is a fully reserved policy.
In a letter of 22 October 2021, the then Cabinet Secretary for Finance, Kate Forbes, and the then Cabinet Secretary for Economy, Fair Work and Culture, Fiona Hyslop, jointly called on the UK Government to reverse their decision to end VAT-free shopping following EU Exit. The letter called on the UK Government to introduce a VAT-free shopping scheme for EU and non-EU visitors to the UK.
The UK Government, as part of their ‘Mini Budget’ on 23 September 2022 announced the introduction of a new digital VAT-free shopping scheme. This however was scrapped as part of the reversal by the Chancellor Jeremy Hunt.
I have called on the Chancellor in my pre-Spring Budget letter to listen to industry and urgently reconsider his position.
The removal of this policy is likely to be having a detrimental impact on retail businesses and may be discouraging tourists from visiting the UK. and Scotland specifically. Many EU countries continue to offer tax-free shopping for non-EU visitors, which make them a more attractive tourist destination. Scotland’s vibrant retail sector is put at a disadvantage as a result.
The Scottish Government’s position remains that the restoration of VAT-free shopping for all overseas visitors to the UK would help support this vital sector in Scotland.
Ultimately, the Scottish Government believes that all tax powers should be devolved to the Scottish Parliament so that we can provide the support that Scottish retailers and tourism businesses need.