No tax (VAT) promotion

A VAT-free promotion lets consumers not pay the VAT amount across all products during a limited number of days.

How it works?

Offer no VAT days for loyalty program members who get their VAT waived based on their membership tier. Based on the tier level, the benefit can be activated once, twice, or three times per calendar year. Also, the duration of the promotion is based on the membership level.

No tax promotion is a good choice for premium brands that need to be more selective in their discounting strategies. By discounting an associated product tax, and not the product itself protects the brand image better. This type of promotion is also a unique member benefit that can encourage participation in your loyalty program.

Best practices

• Ensure the discounted price maintains profitability, accounting for lost tax revenue.
• Ensure the promotion adheres to tax and advertising laws.
• By tiering the promotion, it becomes even more selective and premium.
• By giving customers a choice of when to activate the benefit, they get to better control their shopping journey – avoiding any bitterness associated with running global promotions at arbitrary times.

How to build a no-tax promotion?

Voucherify lets brands build no VAT promo days both as standalone promotions and as a part of a loyalty program. Here is an example of how to set up a no VAT promotion with Voucherify:

VAT rate per market:

• UAE – 5%
• KSA – 15%
• BAH – 10%
  

A number of no VAT days per tier:

• Tier 1 – once per year
• Tier 2 – twice per year
• Tier 3 – three times per year

To implement this scenario, you need to follow these steps:

1. Set up a loyalty program grouping customers into three tiers.
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2. Create a custom event that will be sent to Voucherify when a member decides to use the no VAT promotion on the given day (for data integrity purpose, the custom event needs to be changed every year).

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Besides tiers, you need to build the following segments to group customers based on their membership level and whether they requested the activation of the no VAT promotion, for example:

Tier 1 who activated no VAT promotion:

• Customers from Tier 1.
• With custom event no_vat_today occurred exactly 0 days ago.
• With custom event no_vat_today occurred less than or equal to 1 time.

For the further tiers, the configuration is the same.

The customer segments must also be created yearly to use the current year no_vat_today_xx’ custom event.

Next, build a cart promotion with a promotion tier for each loyalty tier and year. Each promotion tier should apply a fixed amount discount effect based on the market order metadata:

The above configuration will deduct the VAT value from the order based on the market the order is made from. The market identifier is sent in the order metadata field market. To further protect the campaign, you should add validation rules for each tier to check if the customer is in the corresponding customer segment.

The promotion tiers would also need to be created for each year separately to use the current year no_vat_today_xx custom event.

When the customer requests that the current day should be the one when they purchase items without VAT, you need to send the no_vat_today_xx custom event with the customer ID. Afterwards, you should call the Check Eligibility API endpoint to verify if the customer can use the ‘No VAT’ promotion.

If so, you can display a message to the customer that they have successfully enabled the promotion. They will be eligible to make purchases without VAT for the whole day. If the Check Eligibility API endpoint doesn’t return the required promotion, it means that the customer requested the promotion more times than the tier they are in allows.