Local chains prep to give in-store tax refunds

With the government planning to allow tourists to claim tax refunds in locations other than designated airport counters in February, some retailers are gearing up to give the money back in stores.

The moves come as both the government and retailers are increasing their efforts to shore up the domestic tourism industry.

Convenience store chain CU said on Thursday that it has designated 20 stores frequented by tourists as “tax refund shops,” in which visitors can immediately receive money back. It plans to extend the service to additional locations going forward.

Rival 7-Eleven has already registered 30 branches in regions including Seoul, Busan and Jeju Island to offer the refunds since last April.

Lotte Mart is also on track to install the system in stores located in traffic hubs including Seoul Station.

The Ministry of Strategy and Finance introduced a bill in November that would allow tourists to receive an in-store refund for value-added and individual consumption taxes on purchases less than 200,000 won ($166), which account for 79 percent of individual purchases made by visitors to Korea.

Under the existing system, tourists are allowed to shop at specific duty-free outlets, in which the prices of goods already exclude all taxes.

They are also entitled to receive back taxes on many other everyday purchases, but in order to do so, they have to visit specific counters at international airports and present their receipts.

Many wind up not receiving their refund, in part because of inconveniences associated with the process.

“One out of five users of such tax-free shops didn’t receive tax refunds because of the inconvenience,” said Park Jong-dae, a researcher at Hana Financial Investment.

“Different shops frequented by tourists, including drug stores and cosmetics shops, will have an on-site tax refund system following the government’s move.”

Other countries including Japan are known for having measures designed to make it easier for tourists to claim tax refunds.

The plan is an extension of measures first announced by the government in August to spur tourist spending.

Along with the extended tax benefits, tourists who get plastic surgery at a hospital registered with the government can claim back 10 percent of the value-added tax.

According to the most recent data collected in November, more than 500,000 Chinese tourists traveled to Korea that month alone, which marks a 10.2 percent increase from a year earlier.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]