Retailers have reported that many shoppers are travelling overseas to take advantage of lower Value Added Tax (VAT) rates. This trend is causing concern among local businesses who fear losing customers and revenue.

According to a report by The Times, retailers claim that shoppers are venturing abroad in search of better deals due to the discrepancies in VAT rates between different countries.

VAT, or value-added tax, is a consumption tax applied to goods and services in many countries around the world, including the United Kingdom.

Local businesses worried about the loss of revenue

Local businesses have expressed concerns about the potential impact of shoppers seeking lower VAT rates overseas. With the ease of international travel and the availability of online shopping, consumers are increasingly exploring options to stretch their budgets.

Retailers argue that the lower VAT rates in certain countries are enticing shoppers to purchase goods abroad. By doing so, shoppers can save money compared to buying the same products locally.

 As a result, local businesses fear losing customers and, subsequently, a decline in their revenue.

The concerns raised by retailers highlight the need for the government to address the disparities in VAT rates. By establishing a more competitive VAT system, local businesses may be able to retain customers and prevent the outflow of money to overseas retailers.

Calls to ‘level the playing field’

The British Retail Consortium (BRC) has called on the government to review and potentially reform the VAT system to create a level playing field for local businesses. This would help ensure that shoppers are not incentivised to seek better deals elsewhere.

The government has yet to respond to the concerns raised by retailers, but the issue has garnered attention and is likely to spark discussions about potential VAT reforms.

The outcome of these discussions will be crucial for local businesses in retaining customers and sustaining their revenue amidst increasing competition from abroad.