China re-jigs tax refund policy to boost tourist spending

China has introduced a new policy that enables foreign visitors to claim departure tax refunds for purchases as low as 200 yuan ($27) per day at the same store, significantly reducing the previous threshold of 500 yuan.

This is part of the country’s latest move to optimize the departure tax refund policy for foreign visitors. The updated policy will streamline refund procedures and attract more overseas visitors, according to government officials.

Outlined in a policy document jointly released by six government branches, including the Ministry of Commerce and the Ministry of Finance, the country will encourage the establishment of more departure tax refund stores in major commercial areas, pedestrian streets, tourist attractions, resorts and airports to expand nationwide coverage.

Measures will also be taken to promote the inclusion of international brands and popular domestic products, as well as souvenir, gift and specialty stores, as part of the tax refund network.

The policy move comes as China is ramping up efforts to boost consumption amid fresh trade tensions triggered by the United States’ imposition of tariffs on trade partners including China.

Speaking at a news conference in Beijing, Sheng Qiuping, vice-minister of commerce, said inbound consumption contributed about 0.5% to China’s GDP last year, compared with 1%–3% in other major economies, underscoring substantial growth potential.

He said the tax refund mechanism plays a critical role in lowering shopping costs for foreign visitors and attracting greater inbound consumption. “For example, under the prevailing value-added tax system, the refund rate for general goods is set at 11%, effectively providing a more than 10% discount,” he explained.

Under the policy, foreign visitors can claim VAT rebates directly at departure tax refund stores, enabling them to reuse the refunded amount in real time for further shopping. Previously, VAT rebates were only available for withdrawal upon departure, according to information released by the State Taxation Administration.

The upgraded tax refund policy, initially implemented in cities such as Beijing and Shanghai, and Shenzhen in Guangdong province, has been expanded to a nationwide rollout.

The Commerce Ministry said that in 2024 the total spending by inbound travellers reached $94.2 billion, up 78% year-on-year.

Miao Muyang, director of the industrial development department of the Ministry of Culture and Tourism, said the upgraded policy will not only help expand inbound tourism, but also promote the outbound reach of more high-quality domestic products.

In addition to raising the cash refund limit from 10,000 yuan to 20,000 yuan, the government will also strengthen cooperation between tax refund agencies and payment institutions to offer refund services through multiple channels, including mobile payments, bank cards and cash.

In the first quarter of 2025, customs authorities at Beijing Capital International Airport and Beijing Daxing International Airport collectively verified 4,801 departure tax refund applications submitted by travellers from overseas, a year-on-year increase of more than 122%, while the total refund amount came to 240 million yuan, up 82% year-on-year, according to statistics from Beijing Customs.

Data from the National Immigration Administration shows that foreign nationals made 9.22 million entries into China through various ports in the first quarter, a year-on-year increase of 40.2%, indicating that inbound travel is continuing to gain momentum.

China policies put focus on employment

China will roll out measures to keep its employment and economic performance stable and promote high-quality development, according to Zhao Chenxin, deputy head of the National Development and Reform Commission.

Zhao detailed the new measures in five key areas: supporting employment; keeping foreign trade stable; promoting consumption; expanding effective investment; and fostering a sound environment for development.

On employment, the government will encourage businesses to maintain stable staffing levels, intensify vocational skills training, expand work-relief programs, and strengthen public employment services, according to Zhao.

To stabilise foreign trade development, key measures include introducing tailored policies to assist export enterprises in mitigating risks, expanding the global presence of service products, and encouraging foreign-funded enterprises to reinvest in China.

On the consumption front, measures will be unveiled to boost service consumption, improve eldercare services for disabled seniors, stimulate auto sales, and establish skills-oriented wage distribution systems, he said.

In terms of creating a favourable environment for stable development, China will continue to keep the capital markets stable and active, consolidate the stable development of the real estate market, and increase financial support for the real economy, Zhao noted.

He said that all policies have been designed with a strong emphasis on specificity and practicality so that enterprises and individuals feel tangible benefits, and the government will introduce each measure once it is ready.