New Dead Sea mall lures tourists, Israelis with VAT-free shopping

A new mall at the Dead Sea offers both Israelis and tourists the chance to buy value added tax (VAT)-free products, along with an onsite VAT reimbursement counter for tourists, enabling them to avoid lines at the airport.

The 15,000 square meter (161,000 sq feet), NIS 3 million ($838,000) mall, with two commercial floors and some 100 stores, opened its doors last month and was built by UK developer Bercleys. On Sunday it became the first mall to introduce VAT-free shopping on brands including Boss, Armani and Calvin Kline outside the city of Eilat, which has been a VAT-free area since 1985. Other malls in Israel offer VAT-free shopping days as a special offer.

“The same shirt you find in Tel Aviv you will be able to find cheaper at our mall,” said Hagai Adoram, an attorney for UK developer Bercleys, which built the mall and is reportedly also behind converting Eilat’s theme park King City into a commercial and entertainment area with convention halls, a swimming pool area, and food and game stands.

Adoram said the rebate, which will be footed by the developer, is a bid to attract not only local tourists but consumers from all over the country, lured by the lower prices of the mall. “At the moment there is no plan to stop this subsidy,” he said. Management will examine its VAT-free policy eventually to evaluate how effective it is, he added.

Tourists get to buy products at the cheaper, VAT-free price,, but then can still get a VAT rebate on those products. “Tourists benefit twice on products above NIS 400 that are not food products,” said Adoram.

The Dead Sea mall borders the Dead Sea, which is visited by some 2.7 million people a year, more than half of them tourists (Sahar Advertising)

Israeli malls have been suffering from stiff competition with online shopping, driving down profit. The Dead Sea mall, Adoram said, will have the captive audience of the tourists flocking to the area and hopefully, with its VAT-free policy, will draw an added crowd.

Some 2.7 million people, more than half of them tourists, visit the Dead Sea, one of the eight wonders of the world, each year, the developer said. The mall is on the banks of the sea, Adoram said.

“We intend to be one of the most profitable malls in Israel,” he said, adding that since the opening of its doors, some brands’ branches were already showing higher profitability than in other parts of the country.