Attention! Nationwide Promotion of "Immediate Refund Upon Purchase" Service for Tax Refund on Departure for Overseas Tourists

On April 8, the State Taxation Administration issued the "Announcement on Promoting the 'Immediate Refund Upon Purchase' Service for Tax Refund on Departure for Overseas Tourists," which clearly defines the main content, procedures, and implementation timeline of the "immediate refund upon purchase" policy. This service measure will be expanded nationwide from previous pilot regions.

As a convenient service initiative, "immediate refund upon purchase" is an upgraded and optimized version of the "tax refund on departure" policy, aiming to provide overseas tourists with more convenient and diversified tax refund options. This measure was previously piloted in cities such as Shanghai, Beijing, Guangdong, Sichuan, Zhejiang, and Shenzhen.

"Since the pilot implementation of the 'immediate refund upon purchase' policy, it has operated smoothly and gained popularity among overseas tourists. It is now ready for nationwide promotion," stated an official from the Goods and Services Tax Department of the State Taxation Administration. "Compared to the traditional tax refund process, the key feature of 'immediate refund upon purchase' is advancing the refund step. Overseas tourists can receive the refund immediately during their purchase, directly experiencing the benefits of the refund, which encourages them to use the refunded amount for additional consumption on-site."

The Announcement specifies that overseas tourists purchasing tax-refundable items at "immediate refund upon purchase" stores can receive an equivalent refund amount on-site after completing a credit card pre-authorization. Upon departure, customs will verify the tourist’s identity and the tax-refundable items. The tax refund agency will then review the refund information and immediately release the credit card pre-authorization guarantee, completing the tax refund process. The Announcement also clarifies that any tax refund store willing to provide the "immediate refund upon purchase" service can become an "immediate refund upon purchase" store after reaching an agreement with local tax refund agencies.

Li Xuhong, Vice President and Professor of the Beijing National Accounting Institute, stated that the nationwide promotion of this service initiative will not only enhance the service level of China’s tourism industry, creating a "friendly, efficient, and convenient" travel environment, but also further stimulate overseas tourists’ consumption enthusiasm, contributing to high-quality economic development.

An official from the Goods and Services Tax Department of the State Taxation Administration emphasized that tax authorities will strengthen policy interpretation and guidance, continuously upgrade system functionalities, optimize tax refund procedures, and actively support efforts to attract overseas tourists to spend in China, fully unleashing the potential of inbound tourism consumption.

Interpretation of the "Announcement by the State Taxation Administration on Promoting the 'Immediate Refund Upon Purchase' Service for Tax Refund on Departure for Overseas Tourists"

To further improve the convenience of tax refund on departure for overseas tourists and optimize their consumption experience, the State Taxation Administration issued the "Announcement on Promoting the 'Immediate Refund Upon Purchase' Service for Tax Refund on Departure for Overseas Tourists" (hereinafter referred to as the "Announcement"). The key contents are interpreted as follows:

1.What is tax refund on departure?

Tax refund on departure refers to the refund of value-added tax (VAT) for tax-refundable items purchased by overseas tourists at tax refund stores when they depart from exit ports.

Overseas tourists refer to foreigners and compatriots from Hong Kong, Macau, and Taiwan who have resided in mainland China for no more than 183 consecutive days.

2.What is "immediate refund upon purchase" for tax refund on departure? What conditions must overseas tourists meet to enjoy this service?

The "immediate refund upon purchase" service (hereinafter referred to as "immediate refund") is a facilitation measure under the tax refund on departure policy. It allows overseas tourists to sign an agreement and complete a credit card pre-authorization at "immediate refund" stores in regions where the policy is implemented. They can then receive a prepaid amount in RMB equivalent to the tax refund (hereinafter referred to as the "prepaid funds") on-site.

To enjoy this service, overseas tourists must meet the following conditions: pass customs verification upon departure, depart from designated ports within the agreed timeframe as per the agreement, and comply with the tax refund on departure policy.

3.What conditions must tax-refundable items meet to qualify for the "immediate refund upon purchase" service?

All tax-refundable items eligible under the current tax refund on departure policy fall within the scope of the "immediate refund upon purchase" service.

4.What conditions must a store meet to become an "immediate refund upon purchase" store?

Tax refund stores in regions where the "immediate refund upon purchase" policy is implemented can become "immediate refund" stores if they are willing to provide the service and reach an agreement with local tax refund agencies on matters such as prepaid funds.

5.Procedures for overseas tourists to apply for "immediate refund upon purchase"

Overseas tourists applying for "immediate refund upon purchase" must complete three main steps: First, the store issues the prepayment. After signing the agreement, the store processes a credit card pre-authorization for the tourist, issues the "Tax Refund Application Form for Overseas Tourists," and provides the prepaid funds on-site. Second, customs verification. Upon departure, the tourist must present the tax-refundable items, the Tax Refund Application Form, the sales invoice, and valid identification to customs for verification. Third, tax refund agency review. The tourist submits their passport (or other valid ID), the customs-stamped Tax Refund Application Form, and the sales invoice to the tax refund agency in the departure port’s restricted area. The agency reviews the documents. If the tourist departs from the designated port within the agreed timeframe and complies with the tax refund policy, the agency releases the credit card pre-authorization and finalizes the refund, with the prepaid funds considered as the refunded tax amount.

6.What is the agreement? Must it be signed by the overseas tourist personally?

The agreement is a document signed by overseas tourists opting for the "immediate refund upon purchase" service. It declares that the tourist acknowledges the rights and responsibilities of the service, commits to departing from the designated port within the agreed timeframe, and agrees to use a credit card pre-authorization as collateral to receive prepaid funds under specified limits and payment methods. The agreement is provided free of charge by "immediate refund" stores.

The agreement must be signed by the overseas tourist personally. The "immediate refund" store or tax refund agency must retain the signed agreement. The retention responsibility is determined through negotiation between the store and the agency.

7.What is a credit card pre-authorization?

A credit card pre-authorization refers to the process where a store or agency pays the prepaid funds to an overseas tourist using the "immediate refund upon purchase" service while freezing an equivalent amount on the tourist’s credit card.

The pre-authorization is processed by the "immediate refund" store or tax refund agency. The pre-authorized amount must equal the prepaid funds. The release or deduction of the pre-authorization is handled by the tax refund agency in the store’s location. Both the store and agency must retain bank documents related to the pre-authorization.

8.What are prepaid funds? How can overseas tourists receive them?

Prepaid funds are RMB payments equivalent to the tax refund amount, provided on-site at "immediate refund" stores to overseas tourists using the service. Payment methods include cash and electronic transfers.

The prepaid funds are advanced by the "immediate refund" store or tax refund agency. The funding source, payment methods, and limits are determined through negotiation between provincial tax authorities, stores, and agencies.

9.How is the amount of prepaid funds calculated for overseas tourists?

The prepaid funds amount is calculated based on the actual refundable VAT amount derived from the VAT-inclusive amount on the tax-refundable item’s invoice. The formula is:

Prepaid funds amount = Actual refundable VAT amount

Actual refundable VAT amount = VAT-inclusive sales invoice amount × Refund rate - Handling fee charged by the tax refund agency.

10. How are cases handled where overseas tourists fail to fulfill the agreement, exceed the promised departure period, or do not depart from designated ports?

If a tourist fails to comply with the agreement, exceeds the promised departure period, or does not depart from the designated port, the tax refund agency will recover the prepaid funds via credit card pre-authorization deduction within three working days after the promised departure date. When the tourist actually departs, the departure port’s tax refund agency will review and process the refund according to current regulations.