Global Tax Free "Maximum Benefit from Increased Instant Refund Limit"

[Asia Economy Reporter Hyunseok Yoo] Global Tax Free, the number one tax refund company in Korea, announced on the 30th that it is expected to be the biggest beneficiary of the government's system improvements aimed at attracting foreign tourists and revitalizing shopping.

The Ministry of Economy and Finance announced the '2019 Tax Law Amendment Follow-up Enforcement Decree Amendment' on January 5th. The amendment includes raising the immediate refund limit at post-tax refund stores for foreign tourists visiting Korea to enjoy shopping more conveniently, increasing the limit from 300,000 KRW per transaction and less than 1,000,000 KRW per person to 500,000 KRW per transaction and less than 2,000,000 KRW per person. The effective date is April 1st.

With the increase in the immediate refund limit, it is expected that the use and amount of refund services by foreign tourists will expand, benefiting tax refund operators, especially GTF, which holds the number one market share. Last year, GTF raised its domestic market share to the mid-60% range by acquiring the tax refund business division of KTIS, the second-largest tax refund operator in Korea.

Immediate refund is a system where foreign tourists receive a refund at the time of payment while shopping, deducting the refund amount from the payment, so there is no need to visit a separate refund counter.

Currently, GTF provides refund services through various methods including manned and unmanned airport refund counters, manned and unmanned downtown refund counters, mobile refunds, online refunds, and immediate refunds. Among these, the proportion of refunds through immediate refund was about 21% as of 2019. As the proportion of immediate and mobile refunds increases, the operating and maintenance costs of offline refund counters can be reduced, significantly improving profitability. This is the basis and background for GTF being the biggest beneficiary of the new policy.

Kang Jinwon, CEO of GTF, stated, "With this increase in limits, the proportion of immediate refunds will expand significantly," adding, "Along with immediate refunds, various refund methods for the convenience of foreign tourists are being developed, leading to a yearly decrease in the proportion of offline refund counters, which has also caused a sharp decline in the bid prices for airport refund counters held every three years." He continued, "Recently, the demand for simple payments and refunds via mobile by foreign tourists has steadily increased," and added, "Like immediate refunds, using mobile allows VAT refund applications anytime and anywhere without visiting a refund counter."

Meanwhile, GTF achieved significant performance improvements last year, recording sales and operating profits of 59.8 billion KRW and 6.9 billion KRW, respectively, increases of 44% and 895% compared to the previous year.

This content was produced with the assistance of AI translation services.