The new 'tax free' system in the Canaries will be complicated and expensive for tourists

The new 'tax-free' system that has been approved by the Canary Islands Government that will allow tourists from third countries (including the UK since Brexit) to get a refund of the IGIC on their purchases whilst on holiday from February 23^rd, is fraught with deadlines and a minimum spend.

As detailed in the Official Gazette of the Canary Islands (BOC) last Wednesday, which includes the provisions and characteristics of the new system (approved on December 29th), travellers must be entitled to a refund of the IGIC equal to or greater than 40 euros to qualify for the system.

This amount forces tourists to spend a minimum of between 380 euros, when the items are subject to a 15% IGIC, and 816 if it is items subject to 7%, which are the majority in the Canaries, on one or more purchases. All items must have been bought on the same trip and within 90 days for those staying in the islands the maximum amount of time allowed.

The limit to the amount is another novelty of the 'tax-free' system that the Government has opted for compared to the system that exists at the national level and in the main cities and destinations of the world, in which there is no minimum amount to be able to benefit from the refund. The Canarian system has also chosen to leave out the large 'tax-free' operators who return the money on the fly in exchange for a small refund.

Tourists and retailers are not happy with this new system, which will be managed by the Tax Agency of the Canary Islands, claiming it is too complicated for travellers who will only be able to make claims in a three hour ‘window’ before they leave the islands, via interactive terminals that will be installed in ports and airports, will get charged by banks for the transfers to their accounts, meaning they don’t receive the full amount, and it will take up to six months to get it.

DIVA model in mainland Spain:
The way it works in mainland Spain called DIVA, which is similar to that of the rest of the world, allows you to make the return with the large operators on the go, which means you have the money at the moment of your purchase, and more than likely spend it on more shopping whilst on holiday. In the Canary Islands, the traveller will receive the money when he is already back in his country which does not help to generate more economic activity.

Below 40 euros is not worth it:
The director of the Canary Islands Tax Agency, Raquel Peligero, justifies the fact that a minimum amount has been set so that travellers can take advantage of the new 'tax free' system, saying that for low-quantity purchases "it is not worth processing a refund due to management costs. Setting a minimum is normal as we can’t start returning amounts of 50 cents or a couple of euros.”

“There must be a minimum because everything has a management cost and there is a moment when it is not worth it. It is usual”, concludes Peligero, for whom it does not make sense to return less than the cost involved in carrying out the process.

The 40 kiosks that have been acquired and that will be installed in the ports and airports of the islands, will be located before passenger controls. "It was studied whether to place them inside or outside and it was concluded that it was better to make it easier for staff to access," says Peligero, who points out that passenger service offices are going to be installed in the terminals.

Controls will also be tightened to prevent foreign residents on the islands from going to the airports to manage the return of the purchases they make when they do not comply with the requirement to leave the Canary Islands.