Written by(作者): Victor Tu
On January 6th and June 2nd, 2015, the Ministry of Finance and the National Tax Bureau released regulations in regards to tax refunds for goods purchased by individual foreign tourists in mainland China prior to their departure. In this article I will take a look at these new rules.
What is the Departure Tax Refund and What are the Rates?
When a foreign traveler leaves mainland China, he or she has the right to get a VAT refund for purchased goods in an authorized store (duty free shop).
The refundable tax = Purchased price (inclusive of VAT) × 11%.
i.e. You purchased an electronic appliance for 2,000 RMB (total amount on invoice) and you will get tax refund for 220 RMB (2000*11%).
Where Can You Apply for a Refund?
Any air, water or land departure point where a VAT refund is authorized and where appointed agencies are present (i.e. Beijing Capital International Airport).
Who Can Get a Tax Refund?
Any foreigners (inclusive of residents of Hong Kong, Taiwan and Macau) who stay less than a cumulative 183 days in mainland China.
What are the Conditions for the Tax Refund?
- 3 “same”: the same international traveler shop in the same location in the same day.
Also, items purchased cannot have a value less than 500 RMB (i.e. there are 57 duty free shops in Beijing Int’l Airport as of June 30th, 2015).
- The products must not have been unpacked or consumed.
- The period of time between date of purchase and date of departure is less than 90 days.
- All products must exit mainland China by carry-on or other means of shipment.
How to Apply for the Departure Tax Refund?
Purchase goods and obtain a Departure Tax Refund application form and invoice from an authorized duty free shop.
Submit all goods along with the application form and invoice to Customs for inspection and approval.
In the departures area, there are always tax refund agencies (banks) (Shanghai Pudong Int’l Airport and Shanghai Hongqiao have both gotten tax refund agencies as of July 1st, 2013) where you can submit your passport and Customs approved documents and invoice for processing the refund. The agency will pay the taxes immediately on behalf of the tax bureau and will charge around 2% of your tax refund (statutory policy).
Pay in Chinese Yuan (RMB) in person for any amount less than 10,000 RMB. Otherwise pay by bank wire transfer.
The agency will settle the payment with the tax bureau in a specific time period.
Is a member of the Chinese Institute of Certified Public Accountants (CICPA) and a tax faulty member of the Institute of Chartered Accountants in Wales and England (ICAEW). With more than 15 years experience in the accounting industry, he is focused on inbound and outbound investment, with a specialty in international accounting and taxation. If you would like to contact Victor,