Interpretation of the “Announcement on Promoting the ‘Instant Refund upon Purchase’ Service for Overseas Tourists’ Tax-Free Shopping”

2025-04-09 09:18 Source: State Taxation Administration Website

To further enhance the convenience of tax refunds for overseas tourists and optimize their shopping experience, the State Taxation Administration has issued the Announcement on Promoting the “Instant Refund upon Purchase” Service for Overseas Tourists’ Tax-Free Shopping (hereinafter referred to as the “Announcement”). The key points are interpreted as follows:

1. What is Tax Refund upon Departure?

Tax refund upon departure refers to the refund of value-added tax (VAT) on tax-refundable goods purchased by overseas tourists from designated tax-refund shops when they leave the country.

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

2. What is the “Instant Refund upon Purchase” Service? What Conditions Must Overseas Tourists Meet to Enjoy This Service?

The “Instant Refund upon Purchase” service is a facilitation measure under the tax refund policy. It allows overseas tourists to receive an on-the-spot RMB refund (hereinafter referred to as the “advance payment”) equivalent to the tax refund amount at designated “Instant Refund upon Purchase” shops after signing an agreement and completing a credit card pre-authorization.

Conditions for overseas tourists to enjoy this service: The goods must pass customs inspection upon departure, and the tourist must depart from the designated port within the agreed timeframe while complying with all tax refund policy requirements.

3. What Items Are Eligible for the “Instant Refund upon Purchase” Service?

All goods currently eligible for tax refund upon departure qualify for the “Instant Refund upon Purchase” service.

4. What Conditions Must Shops Meet to Become “Instant Refund upon Purchase” Shops?

Tax-refund shops located in regions where the “Instant Refund upon Purchase” service is implemented may become designated shops after reaching an agreement with local tax refund agencies regarding advance payments and other matters.

5. Procedure for Overseas Tourists to Apply for the “Instant Refund upon Purchase” Service

The process involves three main steps:

1. Shop Processing and Advance Payment: After signing the agreement, the shop will process a credit card pre-authorization, issue a Tax Refund Application Form for Overseas Tourists, and provide the advance payment on-site.
2. Customs Inspection: Upon departure, the tourist must present the tax-refundable goods, the Tax Refund Application Form, the sales invoice, and valid identification to customs for inspection.
3. Tax Refund Agency Review: The tourist must submit 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. If all conditions are met, the agency will release the credit card pre-authorization and finalize the refund, with the advance payment counted as the refunded tax.

6. What Is the Agreement? Must It Be Signed by the Tourist in Person?

The agreement is a document signed by the tourist, acknowledging their understanding of the terms, committing to depart from the designated port within the agreed timeframe, and agreeing to a credit card pre-authorization as collateral for the advance payment. The shop provides the agreement free of charge.

The agreement must be signed by the tourist in person. The shop or tax refund agency must retain the signed agreement, with the responsible party determined through mutual agreement.

7. What Is a Credit Card Pre-Authorization?

A credit card pre-authorization involves freezing an amount equivalent to the advance payment on the tourist’s credit card when the payment is issued.

The pre-authorization is processed by the shop or tax refund agency. The local tax refund agency responsible for the “Instant Refund upon Purchase” service will handle the release or deduction of the pre-authorization. All related bank documents must be retained.

8. What Is the Advance Payment? How Can Tourists Receive It?

The advance payment is an on-the-spot RMB refund equivalent to the tax refund amount, provided to the tourist at the shop. It can be disbursed as cash or via electronic payment.

The shop or tax refund agency covers the advance payment initially, with specific arrangements (including payment methods and limits) determined by provincial tax authorities, shops, and tax refund agencies.

9. How Is the Advance Payment Amount Calculated?

The advance payment equals the actual VAT refund amount, calculated as follows:

Advance Payment Amount = Actual VAT Refund

Actual VAT Refund = (Invoice Amount Including VAT) × Refund Rate – Service Fee Charged by the Tax Refund Agency

10. What Happens If a Tourist Fails to Fulfill the Agreement (e.g., Overstays or Departs from a Non-Designated Port)?

If the tourist violates the agreement, the tax refund agency will deduct the advance payment via the credit card pre-authorization within three working days after the agreed departure date. The tourist may still claim the tax refund upon actual departure, subject to standard procedures.