Mexican retailers anticipate rebate windfall

John Gallagher

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A new scheme allowing tourists to collect tax rebates at Mexican airports is set to boost the country’s duty-free retail market

The Mexican government has announced a tax incentive for the more than 24m tourists who visit the country each year. From June tourists spending over Ps1,200 ($115.5) in approved retail outlets on products including fashion goods and souvenirs will be able to reclaim their 15% value-added tax (VAT) at selected airports on their departure. Government officials hope that the cash rebate will lead to greater spend in duty-free shops and other retail outlets at the airports involved in the scheme.

The new scheme will initially operate at Mexico City, Cancun, Guadalajara, Puerto Vallarta and Los Cabos airports. Monterrey, Cozumel, El Bajío, Mazatlán and Morelia airports will join the scheme by the end of 2008, with the remaining Mexican international airports and cruise terminals joining early next year.

Tourists will get half of their expenditure back in cash and the other half by transfer to their bank account or to their credit card within 40 days of leaving the country. Several companies have been granted concessions to operate the scheme, including including Premier Tax Free, Global Refund Tax and Yvesam Retonosa Mundiales.

While local observers in Mexico City and in Cancun were optimistic that the scheme would eventually benefit travel retailers, they told DFNIonline that it would have to overcome a series of teething troubles. Among them will be enlisting downtown retailers—several of whom are not convinced of the benefits of the scheme—to participate.

ASUR commercial director Manuel Gutierrez told DFNIonline he was convinced the project would be beneficial at ASUR’s Cancun International airport. He said:  “In the medium and long term, the scheme will benefit everyone, but the companies operating the scheme will have to make sure that downtown retailers are fully involved. Only one of the companies involved has rented a kiosk at Cancun and in theory all of those involved should have their kiosks ready to go next month. We are sure that once the scheme is up and running it will be good for our commercial activities and we are sure to see some benefit.”