In a significant move to boost inbound tourism and consumer spending, China has overhauled its Value-Added Tax VAT refund policy for foreign visitors. Effective April 8, 2025, the new “refund-upon-purchase” system allows eligible tourists to receive immediate VAT refunds at designated tax-free stores, eliminating the previous requirement of claiming refunds upon departure.
Key Highlights of the New VAT Refund Policy
1. Instant Refunds at Point of Purchase
Foreign tourists can now claim VAT refunds instantly at participating tax-free retailers. Upon making a purchase, travelers present their passports and complete a credit card pre-authorization. The refund amount is provided on the spot, enhancing the shopping experience and allowing for immediate reinvestment into the local economy.
2. Lowered Minimum Purchase Threshold
The minimum spending requirement for tax refunds has been reduced from 500 yuan to 200 yuan (approximately $27), making it more accessible for tourists to benefit from the policy.
3. Increased Refund Cap
The maximum cash refund limit has been doubled to 20,000 yuan (around $2,745), providing greater incentives for higher spending.
4. Expanded Network of Tax-Free Stores
China plans to increase the number of tax refund stores in key areas such as shopping districts, tourist attractions, airports, and hotels, making the refund process more convenient for travelers.
5. Simplified Procedures and Digital Integration
The refund process has been streamlined through digital systems. In many cases, tourists only need to present their passports, with the system automatically retrieving purchase details and calculating the refund amount, often completing the process in about five minutes.
Eligibility Criteria for Tourists
To qualify for the instant VAT refund:
- Non-Resident Status: Travelers must hold non-resident status, verified through their passports and visas.
- Duration of Stay: The stay in mainland China must not exceed 183 days.
- Designated Retailers: Purchases must be made at officially registered tax-free stores equipped with digital invoicing systems.
- Unused Goods: Items must remain unused prior to departure and be presented for customs verification.
- Departure Requirements: Travelers must depart via designated international airports within a specified timeframe (e.g., within 17 days in certain provinces).
Impact on Tourism and Economy
This policy shift is part of China’s broader strategy to stimulate domestic consumption and enhance its appeal as a tourist destination. By simplifying the tax refund process and providing immediate financial incentives, China aims to encourage increased spending by foreign visitors, thereby supporting economic growth amid global trade tensions.
FAQs
1.What is the new VAT refund policy for foreign tourists in China?
As of April 8, 2025, foreign tourists can receive immediate VAT refunds at designated tax-free stores upon purchase, rather than waiting until departure
2.What is the minimum purchase amount to qualify for a VAT refund?
The minimum purchase amount has been lowered to 200 yuan (approximately $27) at a single store on the same day
3.How much can I get back through the VAT refund?
The refund amount varies based on the VAT rate and refund percentage. For example, on a 1,000 yuan purchase with a 13% VAT and an 80% refund rate, you would receive approximately 92 yuan back
4.What do I need to do to receive the refund?
Present your passport at the time of purchase, complete a credit card pre-authorization, and ensure the goods remain unused until customs verification upon departure
5.Are all stores in China offering this instant VAT refund?
No, only designated tax-free stores registered under China’s Tax-Free Retail Program and equipped with digital invoicing systems offer the instant VAT refund.
More
1.For more detailed information and updates on China’s tax refund policies, you can visit the official website of the State Taxation Administration: China Taxation Administration.
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