China has rolled out a new real-time VAT refund policy for foreign visitors, transforming the travel shopping experience.

Under the updated system, tourists can now claim VAT refunds immediately at designated tax-free stores. This replaces the previous model, where refunds were only available upon departure at airports or border points.

Announced by the State Taxation Administration (STA), the shift aims to simplify refund procedures and stimulate in-country spending by foreign travellers.

Piloted, Tested, and Ready for Nationwide Rollout

The instant refund model was first piloted in five key regions—Shanghai, Beijing, Guangdong, Sichuan, and Zhejiang. Following successful trials, the STA has confirmed a nationwide implementation.

This reform aligns China with global best practices in VAT refund systems, streamlining the process and boosting appeal for inbound shoppers.

How the New VAT Refund System Works

Foreign tourists shopping at approved tax-free retailers will now receive instant VAT refunds at the time of purchase. The goods must meet spending thresholds and cannot be consumed before the visitor exits China.

The formula for calculating refunds remains:

Refund Amount = (Sales Price / (1 + VAT Rate)) × VAT Rate × Refund Percentage

For example, a product priced at ¥1,000 with a 13% VAT rate and 80% refund rate would yield a refund of about ¥92.

A Boost for Tourism and Retail

The immediate refund model offers key advantages:

• Increased liquidity for travellers while still in China
• Improved customer satisfaction and ease of shopping
• Enhanced incentive to make additional purchases

By offering refunds instantly, China encourages reinvestment of funds into its local economy during the tourist’s stay.

Global VAT Refund Trends

China’s policy shift mirrors similar global trends:

• France and Germany: Use traditional departure-based refund systems.
• South Korea: Offers instant refunds at checkout for smaller purchases.
• Thailand: Pilots real-time refunds via QR codes.
• Japan: Recently introduced VAT refund reforms for international shoppers.

This new system positions China as a leader in retail innovation across the Asia-Pacific region, especially as global tourism rebounds.

Requirements for Eligibility

Tourists must:

• Reside outside mainland China
• Present valid travel documents (passport, visa)
• Shop at STA-certified tax-free stores
• Spend a minimum amount (as per STA guidelines)

Retailers must:

• Be registered in China’s Tax-Free Retail Program
• Use digital VAT invoicing systems (fapiao)
• Connect to approved refund processing platforms

A Win for Visitors and Retailers Alike

The updated VAT refund system not only improves the tourist shopping experience but also strengthens China’s position in the global tourism market.

The STA has stated it will continue refining the system to ensure compliance and enhance efficiency for both tourists and participating retailers.