VAT refund China: A paradigm shift for foreign tourists

Foreign tourists in China can receive an instant VAT refund on purchased goods at certain retail stores. With this nationwide real-time VAT refund system, the government aims to increase the attractiveness of the country for international visitors. The Ecovis experts explain the process.

Under the new rules issued by the State Taxation Administration (STA), foreign tourists who shop at certified tax-free retailers can receive their VAT refund on the spot, following a credit card pre-authorisation. Customs will later verify the purchase and traveller’s identity upon departure, at which point the refund becomes final. To qualify, the buyer must reside outside mainland China and stay no longer than 183 days.

The advantages of the VAT refund system

This new system offers clear advantages: no more lengthy refund queues at airports, no paperwork in many stores, and immediate liquidity – refunds are credited to the shopper’s account within minutes. Currently, in Zhejiang Province alone, over 120 stores already support this process. Feedback from travellers has been overwhelmingly positive, citing speed and convenience as key benefits.

Bring your passport with you when you go shopping and ask the retailer about the exact procedure.

Pingwen Hu, Senior Partner and Certified Public Accountant, ECOVIS Ruide Certified Public Accountants Co., Ltd, Shanghai, China

The reform is part of China’s broader strategy to stimulate inbound tourism and consumer spending. Compared globally, this policy places China alongside leading countries such as South Korea and Japan, which have also introduced point-of-sale VAT refunds.

For further information please contact:

Pingwen Hu, Senior Partner and Certified Public Accountant, ECOVIS Ruide Certified Public Accountants Co., Ltd, Shanghai, China
Email: pingwen.hu@ecovis.cn