China now offers instant tax refund to tourists in bid to boost consumption. Here's how it works

The Star

25-05-2025

BEIJING: Visitors to China might soon find it easier to claim tax rebates at store checkouts – and that could mean a little extra cash to spend during their trip and fewer queues at the airport.
Experts say this could boost the economy, but the key will be getting more retailers on board with the programme.
China recently revised its tax rebate policy to allow foreign tourists to receive their tax refunds instantly at eligible stores, rather than only at the airport, and lowered the minimum spending required for such claims.
Since April 27, tourists who spend at least 200 yuan (S$36) at the same store on the same day are eligible for the instant tax refund, down from the previous 500 yuan.
The maximum cash refund amount has also been raised from 10,000 yuan to 20,000 yuan.
Refunds can be received instantly through mobile payments such as WeChat and Alipay's digital wallets, credit cards and in cash.
Previously, tourists had to get paper forms and receipts in order, and could receive the refunds only at the tax refund counter at the airport right before leaving the country.
The catch? Not all shops offer this service, but 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, those from time-honoured Chinese brands such as traditional Chinese medicine pharmacy Tong Ren Tang and silk store Rui Fu Xiang, 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, or $4,300, including tax, can receive an in-store refund of about $462 – 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 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.
Auratic, a Chinese porcelain tableware brand, was the sole store in Beijing's Silk Street mall offering in-store tax rebates to tourists. - Photo: ST
Shan Guo, a partner at business consultancy Hutong Research, said the departure tax refund, according to China's current value-added tax rate, 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, 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.
In 2024, China's inbound tourist spending accounted for about 0.5 per cent of China's GDP, compared with 1 per cent 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, Guo noted that it was now a matter of getting more shops on board the instant tax rebate programme, as some retailers may not feel that offering this service benefits them.
A sign near the entrance of luxury shopping mall SKP in Beijing indicating that the mall offers tax rebates to foreign tourists. - Photo: ST
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, which is marked with a large blue sign.
At Taikoo Li Sanlitun, a trendy shopping area popular with the young, most luxury international boutiques such as Gucci and Moncler offer the service. But a number of local Chinese brands, such as popular perfume brand To Summer, do not.
The roll-out 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 handicraft, only one store selling porcelain tableware offered the service.
Some sales assistants were perplexed when asked if their shop offered in-store tax rebates for foreign tourists, saying they had not heard of this new policy.
But three sales assistants told ST that they have been informed there will be a mall-wide push to implement the in-store tax refund, although the timeline was 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 at the same store on the same day.
Present your passport at the store's checkout. The store will fill 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. - The Straits Times/ANN