Duty Free Zone Definition

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on January 11, 2021

Define Duty Free Zone In Simple Terms

A duty-free shop is a retail store whose goods are not taxed by local or national entities, so long as the goods sold by these stores will be taking the goods out of the country.

What Does Duty Free Zone Mean In Finance?

Stores categorized as “duty-free” are typically in a duty-free jurisdiction, known as a “duty-free zone.”

Duty Free Zone Example

Locations which facilitate travel, such as international airports and seaports, are commonly categorized as duty-free zones due to travelers commonly leaving the country shortly after making a purchase.

While the duty free shop may be tax exempt, travelers may be expected to pay an import tax upon bringing the goods into a new country. Tax is often incurred only upon bringing goods whose value exceeds a predetermined limit, so retail purchasers often do not need to pay an import tax.

Duty Free Zone FAQs

A duty-free shop is a retail store whose goods are not taxed by local or national entities, so long as the goods sold by these stores will be taken out of the country.
Stores categorized as “duty-free” are typically in a duty-free jurisdiction, known as a “duty-free zone."
Locations which facilitate travel, such as international airports and seaports, are commonly categorized as duty-free zones due to travelers commonly leaving the country shortly after making a purchase.
Tax is often incurred only upon bringing goods whose value exceeds a predetermined limit, so retail purchasers often do not need to pay an import tax.