I’ve always wondered why these shops are “duty free.” If I am at LGA and flying to Paris I see a duty free store that I am eligible to shop. Why is that? I am in the United States and in the State of New York. Why can I buy booze and smokes without state and federal taxes?
Note that you might pick up a 175 ml bottle of vodka in an airport duty free. You get it at the plane (or stapled into a bag with receipt), put it in your carry on; fine. You get to your first US port, where you have to claim your baggage and take it through customs and immigration; fine. Now you’re going to recheck your bag and get on your domestic flight with your carry on. But if your domestic flight requires a security re-check, your 175 ml bottle is too large to be in carry on. Your best option is to know this in advance and have a solid, leak-proof carrier to stick it in your checked bag before you re-check it. Otherwise, you will lose the bottle at security, even though you bought it at duty free one airport back.
^ This is the answer to the OP. But let me explain just a little bit.
Let’s use an example of a Duty Free store in Sarnia, Canada, at the Blue Water Bridge that crosses into Port Huron, USA. The Duty Free store is Duty Free in Canada. The store hasn’t paid duty, and it’s only allowed to sell to people leaving the county, because no import taxes have been paid. That’s why’s is duty-free; it’s duty free to them not to you (necessarily). They need your passport (and in airports, boarding pass) to prove that it’s leaving the country and thus no duty is due to their government.
When you return to the USA, there is a limited amount that you, as a guest or citizen, is allowed to import duty free. It doesn’t matter if you purchase it at Ontario’s “Beer Store” or a LCBO or even the duty free store. If you exceed the limit – regardless of the source – you are expected to pay the duty.
The difference, then, between buying your stuff at the LCBO or the Duty Free store is that the LCBO has paid duty on its imported goods (say, Scotch whiskey). The Duty Free store has not. So if you purchase within the duty-free limit at either store, you can bring them into the USA without paying duty. Presumably the price at Duty Free will be cheaper than LCBO, because LCBO has to mark up due to the duty is has paid.
When comparing domestic products, there’s no duty, but there may be local tax laws. So if you buy a two-four of Blue at the Beer Store versus the Duty Free, there’s not likely going to be a difference (plus, Blue in Michigan already costs 1/2 of what it costs in Ontario anyway). The Duty Free may be able to offer it less than the Beer Store, but then it’s not related to duty, but rather local Ontario law.
tl;dr: Just because you bought it “duty free” doesn’t mean you don’t have to worry about duty!
While the prices are sometimes similar, sometimes there are big savings, and sometimes there are items you can’t purchase in your own area, or export-only items that are hard to find. Glenmorangie Cellar 13, for example.
Come to GB and it gets more complicated. On the Mainland, within the EU there is no control over taking goods across frontiers, unless it is a commercial operation (that can be a grey area but does not affect tourists, only smugglers). duty on the Mainland is generally lower than in GB so many people catch a ferry to France or Belgium to stock up with duty paid alcohol and fags.
On the ferry and in the port, are duty free shops. Here you can buy so called duty free goods which are often more expensive than the duty paid equivalent in a supermarket on either side of the Channel. When you arrive in GB, there is a de facto limit to the quantities that HMRC will accept as being for personal consumption:
This does not prevent people from hiring a van, taking a cheap ferry to Belgium, and telling the customs that the full load of wine, beer and spirits, with a few thousand cigarettes on top, is for a planned wedding party.