Spain, Japan, and Saudi Arabia tranforming tourism
Countries are adapting their strategies to meet growing traveler demands and address economic priorities. From visa-free initiatives to record-breaking visitor numbers and reforms in tax-free shopping systems, nations are redefining how they attract and manage tourists. China, Spain, and Japan are leading examples of how tourism policies can drive economic growth and cultural engagement, while Saudi Arabia and the Faroe Islands are balancing economic ambitions with sustainability. These developments underscore the dynamic interplay between tourism, governance, and global connectivity, offering fresh opportunities and challenges for travelers and destinations alike.
Sustainable travel initiatives
There is a growing emphasis on sustainable travel, encouraging tourists to adopt eco-friendly practices. Recommendations include reducing carbon footprints by opting for flight-free travel when possible, supporting local and organic food sources, and choosing eco-certified businesses. Travelers are also advised to avoid single-use plastics, pack lighter luggage, and offset unavoidable carbon emissions responsibly. Promoting diversity, equity, and supporting local economies are also highlighted as key aspects of sustainable tourism.
Spain's record-breaking tourism
In 2024, Spain welcomed a record 94 million international tourists, marking a 10% increase compared to 2023. This surge contributed €126 billion to the economy, a 16% rise in tourist spending from the previous year. Tourism now represents 12.3% of Spain's GDP. The government anticipates this upward trend to continue in 2025, with predictions of a 9% rise in visitor numbers and a 16% increase in spending, amounting to €36 billion in the first four months alone. However, the influx has led to tensions in cities like Barcelona, which plans to shut down short-term rentals by 2028 to combat rising housing costs. The government aims to manage tourism better by regulating rental accommodations and promoting environmentally sustainable tourism.
Japan revamps tax-free shopping amid record tourism surge
Japan is undergoing significant changes to its tax-free shopping system for international tourists as it prepares to introduce a refund-based model starting in fiscal year 2026. Currently, tourists can purchase goods tax-free by presenting their passports at eligible stores, but under the new system, visitors will pay the full price, including the consumption tax, at the time of purchase. Refunds will be claimed upon departure by presenting receipts and purchased items to customs officials, with refunds issued in cash or credited to pre-registered credit cards.
The changes are part of a broader effort to align with international tax standards and address issues of misuse. A 2022 customs survey revealed ¥1.85 billion in unpaid taxes due to unverified tax-free purchases, prompting the government to transition to a more regulated system. The reform will also simplify rules, such as removing distinctions between "general" goods like clothing and "consumables" like cosmetics and food, while eliminating current packaging requirements. Additionally, the cap of ¥500,000 on tax-free consumables is expected to be removed, allowing tourists more flexibility in their purchases.
Japan's tourism boom
These changes come as Japan experiences a tourism boom, with a record-breaking 36.87 million visitors in 2024. This surge in inbound tourism has also driven sales at convenience stores to record highs, as international visitors increasingly rely on these outlets for a range of items, from food and beverages to daily necessities. Visitor spending in 2024 reached 8.1 trillion yen ($51.57 billion), a significant 53% increase from the previous year, underscoring the role of tourism in revitalizing Japan's economy.
By reforming its tax-free shopping system and enhancing convenience for visitors, Japan aims to sustain its position as a top global destination while ensuring proper tax collection and addressing the challenges of overtourism. These measures reflect the country’s commitment to balancing economic growth with effective governance and a positive tourist experience.
China's visa-free entry expansion
China has introduced visa-free entry for up to four weeks for citizens of nearly 40 countries, including Australia, aiming to boost economic growth and enhance its international image through soft diplomacy. This policy shift has led to a significant increase in foreign visits, though numbers remain below pre-pandemic levels. The majority of visitors are from neighboring or friendly nations. Despite the global tourism recovery, geopolitical tensions and safety concerns continue to affect Western travelers' interest in visiting China. The Chinese government plans to further expand visa-free privileges to stimulate the culture and tourism sector, though political considerations still influence eligibility.
New York City's tourism increase
In 2024, New York City welcomed 64.3 million visitors, marking a 3.5% increase from the previous year and the second-highest tourist count in the city's history. Despite not reaching the pre-COVID peak of 66.6 million visitors in 2019, the city is projected to achieve a full tourism recovery with over 67 million visitors expected in 2025. Tourism generated over $6.8 billion in tax revenue and $51 billion in direct spending, supporting more than 388,000 jobs in the leisure and hospitality sector. Domestic visitors primarily came from cities like Boston and Philadelphia, while international visitors were led by the U.K., Canada, France, Brazil, and Italy. Challenges such as exchange rates and visa access remain, but ongoing investments in city airports aim to enhance the travel experience.
Faroe Islands' tourism management
The Faroe Islands have experienced a significant tourism boom, with visitor numbers reaching 130,000 in recent years, up from 60,000 back in 2013. This growth has boosted the local economy, with tourism now representing 6% of GDP, compared to 1% in 2015. However, the influx raises concerns about sustainability and the preservation of local traditions and culture. The Faroe Islands aim to manage tourism growth by focusing on high-quality experiences and avoiding the pitfalls of mass tourism, advocating for agritourism and controlled development to sustain their way of life and natural beauty.
Saudi Arabia to launch VAT refunds for tourists in 2025
Saudi Arabia will introduce a VAT refund system for tourists as part of its Vision 2030 plan to diversify the economy and boost tourism.
Eligibility: Tourists can claim VAT refunds on personal-use goods taken out of the country. Items like vehicles, tobacco, and food are excluded.
Process: Refunds will be managed by authorized service providers, who will verify claims and may charge a commission. ZATCA will oversee the system.
Tourism targets: The initiative supports Saudi Arabia’s goal to attract 127 million visitors and generate SAR 346.6 billion in tourism spending by 2025.
This system aims to enhance the shopping experience, increase tourist spending, and solidify Saudi Arabia’s position as a global tourism hub.
What Is tax-free shopping?
Tax-free shopping allows eligible tourists traveling internationally to get a refund on the sales taxes and value-added taxes (VAT) they pay when purchasing goods abroad.
When you shop tax free, you will pay these taxes at the time of purchase. However, you can then claim a refund on those taxes when you leave the country as an exporting tourist. (You are considered an exporting tourist when you purchase goods and take them with you home, therefore becoming eligible for a refund of the VAT that you paid during the purchase.)
This VAT tax refund means you ultimately pay less for your vacation souvenirs and other purchases made while traveling in foreign countries.
Depending on the destination’s tax rate, a VAT refund can translate to 10-25% savings off the initial price. You can read more here.