Duty-Free Zone

Written by True Tamplin, BSc, CEPF® | Reviewed by Editorial Team

Updated on December 14, 2022

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

What is a Duty-Free Zone?

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.

What does it mean to be Duty-Free?

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

Where are Duty-Free Zones?

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.

Are Duty-Free retail shops totally tax free?

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.

What is the purpose of a Duty-Free Zone?

The primary purpose of a free-trade zone is to remove from a seaport, airport, or border those hindrances to trade caused by high tariffs and complex customs regulations.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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