Singapore startup rings up GST refunds on mobile

Published: 26.03.2018 Related countries:  Singapore Singapore

PAPER receipts may soon become relics when it comes to tax-free shopping. Homegrown startup Tourego got the ball rolling with the world's first fully-mobile tax refund solution last December, allowing travellers to Singapore to claim Goods and Service Tax (GST) refunds using their phones.

Travellers first register their passport details with a photo on Tourego's namesake mobile app. At a participating retailer, they hand their phones to the cashier, who issues a digital refund ticket if requirements are met. Under the law, travellers must spend at least S$100 - inclusive of GST - worth of goods from a participating retailer. Additionally, the refund applies only if the traveller leaves Singapore via Changi Airport or Seletar Airport. At the airport, travellers join the queue at the GST refund area. When they reach the self-help kiosks, they scan the tickets on their phones and the refunds will be processed in the form of cash, cheque or credit card. Tan Tie Wee, founder and chief executive of Tourego, said the inspiration behind the app came from conversations he had with colleagues from China in his previous job. He said: "One of their pet peeves was that they could not get a tax refund due to language barriers or a lack of time." With his experience as a former Inland Revenue Authority of Singapore (IRAS) director with the GST division and understanding of the Chinese market, he sought to create Tourego. The mobile app, available on both Android and iOS systems, is currently for use only in Singapore. So, only non-Singaporeans - who can be considered travellers - are eligible to register an account with the app. Mr Tan acknowledged it is a David-and-Goliath situation, as he faces competition from other tax refund operators who are much bigger and more experienced. Tourego's competitors in Singapore - Global Blue, Premier Tax Free and Global Tax Free - all have operations in other parts of the world and a headstart of a few years at least. The company has attracted a number of investors, but Mr Tan declined to name who they are. But, he said, the company's paid-up capital is S$2 million. The average amount of GST refunded by all operators each year is S$200 million for the past five years, IRAS said. Each time an app user claims a GST refund, Tourego takes a 15 per cent cut as a form of service fee. Under IRAS guidelines, operators must refund at least 85 per cent of GST to travellers on average. A check on the Google Play Store revealed that there are 500 to 1,000 app installs. Mr Tan said the company has recorded thousands of downloads in the Chinese market - where the Google Play Store is not available. About 150 retailers have opened their doors to the app, including Robinsons, Zara and Guardian. Tourego aims to double the number of retailers in the coming months. At the same time, the company is looking to double or triple the number of downloads. But Tourego's competitors are not resting on their laurels. In January this year - a month after Tourego was officially launched - Global Tax Free announced a partnership with Alipay, the world's largest mobile payment platform. The partnership allows Chinese travellers to deposit tax refunds directly and instantly into their Alipay accounts, which they can access on their phones. However, this is not exclusive to Global Tax Free as other operators, like Tourego, can offer this service for no added cost. Industry leader and pioneer Global Blue is currently rolling out a mobile customer care service here. The service guides travellers through the entire tax refund process via real-time SMS and emails, activated by their tax-free purchase at the retailer. In addition, Global Blue said the company will launch its own fully paperless solution in Singapore at a later date. Ranita Sundra, director of attractions, dining and retail at Singapore Tourism Board, said: "The Singapore Tourism Board is always keen to support innovative ideas and solutions that could enhance the shopping experience for visitors. "Mobile payment platforms have been gaining popularity around the world, and Tourego and Alipay have ridden the wave by harnessing such technology to serve visitors in the area of tax refund." On the impact on travellers, Euromonitor International research analyst Chayadi Karim said that market coverage is rather limited, due to some likely resistance to adoption and problems in new technologies. He added: "It is important to note that the mobile tax refund solution acts as a tool of convenience for tourists when shopping, rather than a catalyst for additional shopping." Tourego welcomes the innovations that its competitors are bringing to the table. The company is fine-tuning the application, exploring ways to eliminate the queue at airport kiosks. It is also in talks to introduce the application in other countries like Thailand, Japan and South Korea within a year.