AIRPORTS have absorbed VAT on goods to ensure they undercut high-street retailers following the end of duty-free.
BAA, which runs the main London and Scottish airports, plus Southampton, will pay the 17.5% VAT due on items.
BAA will also absorb the duty on spirits. This will cover 20%-40% of the price of a bottle of whisky or vodka.
BAA said its policies will ensure 90% of duty and tax-free items will stay at prices set before the European Union abolished the perk. But, BAA said some spirits and cigarettes would not be covered as the duty was too much for the company to pay. Passengers will be able to get discounts on bulk purchases – as limits have been abolished – and buy goods on the Internet.
Cardiff International Airport commercial manager Steve Hodgetts said the airport has opened a new perfume and cosmetics department to attract customers. Cardiff’s owners TBI will pay the VAT.
The airport is also extending its tax and duty-free store to differentiate between goods that remain duty-free and those that come under EU legislation.
Luton Airport is intending to increase the number of tax-free items in its shops to make up for the loss of intra-EU sales.
Chief executive Frank Pullman said: “Our duty-free shop will be open for business, for all international passengers.”
Luton will cover the VAT costs on perfume, cosmetics, jewellery and electrical goods.