VAT Refunds Don’t Have to Be Painful

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Have you ever tried to get a VAT refund when traveling abroad?

Most of the time, it’s hard to tell if it’s even worth the hassle. It’s a nightmare.

But it doesn’t have to be.

My latest guest is Ameer Jumabhoy, Co-Founder and VP of Consumer Technology at UTU, a company making painful VAT refunds a thing of the past.

What we talked about:

  • The problem with VAT refunds
  • How UTU is making it easier to get your refund
  • Why the industry has been slow to change

Like a VAT out of hell…

In case you don’t know what VAT refunds are, we’ll start with a quick primer.

VAT refunds and tourism

VAT is a value added tax on goods.VAT is not levied on goods that are exported from the country.

In certain countries — predominantly in Europe — you can get a refund for this tax you pay if you are planning to export the goods out of the country, even shopping as an individual.

Extending this to tourists is a measure these countries have taken because there are more benefits for the country when the purchaser of the goods is also visiting.

Tourists will spend money on hotels, food, activities, etc. and not just the cool item they bought.

It’s a great idea.

But the execution leaves a lot to be desired

Is it really worth it?

First, the refunds are not automatic and not offered at the point of purchase — which distinguishes them from “duty free” goods, which do not require you to pay VAT.

Instead, they give you a card to fill out and you often have to visit multiple locations to get a refund.

And usually, it’s not even the whole refund.

“Tourists are finding that they’re getting very little for their VAT refund — roughly 60%.”

Ameer Jumabhoy of UTU

Turns out, the arcane, manual, paper-based process eats up a large portion of that refund.

So, if you’re like me, you may find that oftentimes, it’s not even worth it.

The easier way

UTU has created an alternative digital method for getting your refund that takes the pain out entirely.

It helps every party involved:

  1. The consumer
  2. The brand
  3. The government

“The idea behind UTU is to really stitch together the tourists, the government, and the brand to bring a lot more value to each.”

Ameer Jumabhoy of UTU

1) The consumer

This is the most obvious way they are helping, because it’s the consumer who has their lovely vacation ruined by getting stuck in line for a refund they aren’t even sure is worth it.

By offering a digital alternative, UTU has made those lines obsolete.

And the customer can expect a much heftier refund — 100% back — because UTU’s digital approach saves on the costs of these outdated refund systems.

2) The brand

By offering a refund to consumers immediately, UTU is putting more money in their pocket while they are at the store.

And they can use that money to… yeah, you guessed it: buy more stuff.

Brands have the opportunity to sell more to the consumer because the consumer has more money to spend.

3) The government

By making these refunds so simple, UTU is actually helping accomplish the aims of the governments that decided the refunds were a good idea in the first place — and better than the stagnant industry has been able to so far.

The tourist puts more money into the local economy because they have more money to spend.

Which is good news for everybody.

Why a solution took so long

It may seem like somebody should have done this a long time ago. It’s hard to fathom how something created to incentivize people to spend money was about fun as a root canal before anaesthesia was discovered.

The root of the issue stems from the fact that the process hasn’t changed since the industry’s inception in the 90s.

Back before iPhones, those lines and the wholesale slaughter of trees to accomplish something were a little more acceptable.

But the industry is changing.

For one, it has UTU now. But even governments — notoriously inefficient bureaucracies — are getting on board these days.

“I’m starting to see many countries actually embrace the digital piece on the customer side for VAT refunds.”

Ameer Jumabhoy of UTU

UTU is a step the industry has needed to take for a long time.

Less lines. Less paper. Less hassle.

This post includes highlights of our podcast interview with Ameer Jumabhoy, Co-Founder and VP of Consumer Technology at UTU.

Subscribe to hear this episode and many more like it. For the entire interview, you can listen to The B2B Revenue Executive Experience. If you don’t use Apple Podcasts, we suggest this link.

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