China refines departure tax refund policy to encourage inbound consumption

In a fresh move to boost inbound spending, China unveiled a new set of measures on Sunday to further optimize its departure tax refund policy to improve the shopping experience of overseas travelers.

The minimum purchase threshold for departure tax refunds has been lowered, allowing overseas travelers to apply for a refund if they spend at least 200 yuan (about 27.75 U.S. dollars) at the same store on the same day and meet other relevant requirements, according to a circular jointly issued by the Ministry of Commerce and five other government departments.

While ensuring proper risk management, refunds will be made available through multiple channels, including mobile payments, bank cards and cash, to better accommodate the diverse payment preferences of overseas travelers. The upper limit for cash refund has been raised to 20,000 yuan.

The circular also outlines steps to expand the number of departure tax refund stores, enrich the supply of related goods and improve related services.

More departure tax refund stores will be set up in major shopping areas, pedestrian streets, tourist sites, resorts, cultural venues, airports, passenger ports and hotels, according to the circular.

Departure tax refund stores are encouraged to broaden product offerings to include time-honored brands, renowned Chinese consumer goods, smart devices, intangible cultural heritage items, crafts and specialty products, among others.

A series of activities to promote shopping in China will be launched to support local efforts to cultivate and promote high-quality signature products, such as "city gifts" and "must-buy" items, in departure tax refund stores.

Speaking at a press conference on Sunday, Sheng Qiuping, vice minister of commerce, said that overseas travelers mainly purchased international brands when claiming tax refunds, with relatively few domestic brands available and limited shopping choices overall.

The lower threshold not only reduces the entry barrier for tax refund shopping, but also allows more specialty stores, souvenir shops, and gift shops with lower average transaction amounts to join the tax refund network, helping promote the sales of Chinese brands, Sheng said.

Meanwhile, the regulations regarding departure tax refund have been revised to optimize related services and streamline the refund process to help overseas travelers more easily benefit from departure tax refund policies, according to the country's taxation authorities.

Earlier this month, China announced a nationwide shift from a refund-upon-departure model to a refund-upon-purchase model for departure tax refund, enabling foreign visitors to instantly claim value-added tax rebates at tax-free stores across the country.

"Providing overseas travelers with a greater variety of shopping options and more convenient tax refund services will help stimulate inbound consumption and support high-standard opening up and economic growth," said Chen Binkai, vice president of the Central University of Finance and Economics.

China started to implement the departure tax refund policy for overseas travelers in 2015. Since its implementation, the scale of departure tax refunds has grown year by year, benefiting an increasing number of overseas travelers.

Official data showed that last year, the sales revenue of goods eligible for departure tax refunds and the amount of tax refunded both posted strong growth, rising by 120 percent and 130 percent year on year, respectively.