China eases tax refund rules for tourists

Since April 27, tourists who spend at least 200 yuan (S$36) on the same day at the same store are eligible for the instant tax refund. ST PHOTO: MICHELLE NG
China now offers instant tax refunds to tourists in bid to boost consumption. Here's how it works
– Visitors to China might soon find it easier to claim tax rebates at the store's checkout – and that could mean a little extra cash to spend during the trip and fewer queues at the airport.
Experts say this might boost the economy, but the key is getting more retailers on board the programme.
China recently revised its tax rebate policy to allow foreign tourists to receive their tax refunds instantly at eligible stores, rather than doing so only at the airport, a nd also lowered the minimum spending for such claims.
Since April 27, tourists who spend at least 200 yuan (S$36) on the same day at the same store are eligible for the instant tax refund, down from the previous 500 yuan.
The maximum rebate amount for a cash refund has also been raised from 10,000 yuan to 20,000 yuan.
Refunds can be instantly received through mobile payments such as WeChat and Alipay's digital wallets, credit cards and in cash.
Previously, tourists had to get their paper forms and receipts in order, and could get the refunds only at the tax refund counter at the airport right before they left the country.
The catch? Not all shops offer this service, but the Chinese authorities said they are working to broaden the list of such tax-refund stores in major shopping areas, pedestrian streets, tourist sites, resorts, cultural venues, airports, passenger ports and hotels.
Goods eligible for refunds include luxury items, time-honoured Chinese brands such as traditional Chinese medicine pharmacy Tong Ren Tang and silk store Ruifuxiang, craft, cultural and heritage items, renowned Chinese consumer goods and sports products. Food and beverage stores are not included in the list.
Chinese state media China Daily noted that a tourist who buys a Huawei Mate XT smartphone with an original price of 23,999 yuan (US$3,299) including tax, can receive an in-store refund of about US$360, which is enough for a high-speed train ride from Beijing to Shanghai and one-night luxury hotel stay.
The policy tweak aims to boost inbound tourist consumption in the world's second-largest economy by getting visitors to spend more and sooner, as Beijing attempts to cushion some of the damage from the ongoing US-China trade war.
The revised model was piloted in several cities such as Beijing, Shanghai and Guangzhou, before being rolled out nationwide in April.
Ms Shan Guo, a partner at business consultancy Hutong Research, said the departure tax refund, according to China's current value-added tax rate (VAT), is around 11 per cent.
'The revised policy means tourists have 11 per cent more cash to spend in China, instead of bringing it home after getting it upon departure,' she said.
Assuming that tourists spend all the cash refunded, Ms Guo estimated that it could translate to another 0.05 per cent support to China's gross domestic product (GDP) – a modest figure but a boost nonetheless.
'The upside could be higher if tourists spend more than what they were refunded and if the policy attracts more visitors. Cities such as Shanghai could benefit as it is usually tourists' first and last stop in China, as well as the go-to place for luxury shopping,' she said.
A sign near the entrance of luxury shopping mall SKP in Beijing indicating that the mall offers tax rebates to foreign tourists.
ST PHOTO: MICHELLE NG
In 2024, China's inbound tourist spending accounted for about 0.5 per cent of China's GDP, compared with 1 to 3 per cent in major economies. Chinese Vice Minister of Commerce Sheng Qiuping highlighted it as an area with significant growth potential on April 27 when announcing the measures.
A total of 132 million tourists spent more than US$94.2 billion in China in 2024, an increase of 77.8 per cent from 2023, according to the National Bureau of Statistics.
With the policy in place, Ms Guo noted it is now a matter of getting more shops on board the instant tax rebate programme as some retailers may not feel that its benefits justify them offering this service.
A check by The Straits Times in Beijing found that high-end shopping centres, SKP and China World Mall, have an instant tax refund counter, marked with a large blue sign, where tourists can get their refunds.
At Sanlitun Taikoo Li, a trendy shopping area popular with the young, most luxury international boutiques such as Gucci and Moncler offer the service. But most local Chinese brands, such as popular perfume brand To Summer, do not.
The rollout of the programme appears uneven, as smaller malls have not yet come on board.
At Silk Street, a tourist-centric shopping mall in Beijing selling silk garments, leather goods and traditional handicrafts, only one store selling porcelain tableware offered the service.
Auratic, a Chinese porcelain tableware brand, was the sole store in Silk Street mall in Beijing that currently offers in-store tax rebates to tourists.
ST PHOTO: MICHELLE NG
Some sales assistants were perplexed when asked if their shop offered in-store tax rebates for foreign tourists, saying they had never heard of this new policy.
But three sales assistants told ST that they have been informed that there will be a mall-wide push to implement the in-store tax refund, although the timeline is unclear.
A sales assistant selling Chinese brocade jewellery boxes, who wanted to be known only as Ms Wang, said: 'It'll be good for business because only tourists buy these items as souvenirs. But whether our in-store tax rebate system will be ready in two weeks or two months, I cannot say for sure.'
How to get the in-store tax refund
Spend at least 200 yuan (S$36) on the same day at the same store.
Present your passport at the checkout. The store fills in a digital tax refund application form, which takes in your credit card number or e-wallet details, and does the tax refund on the spot or may direct you to a centralised refund counter within the mall or shopping area.
At the refund counter, receive your funds via WeChat and Alipay e-wallets , credit cards or in cash.
At the airport before departure, present the digital form and receipts at the e-tax refund kiosk to validate your purchases. If you do not do this, your refund might be reversed and charged back to your credit card or e-wallets.
Michelle Ng is China Correspondent at The Straits Times. She is interested in Chinese foreign policies, property trends, demographics, education and rural issues.
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