Explainer: Frequently asked questions about tax refunds

Buy & Refund Service in Shanghai

When overseas travelers, including those from Hong Kong, Macau and Taiwan, purchase tax-free goods and complete the Tax Refund Application Forms in designated tax-free stores in Shanghai, they can immediately receive the tax refund in cash upon purchase.

Application Requirements

(1) The purchase amount in designated Tax-Free Shops ranges from 500 yuan (US$68.95) to the stipulated limit.

(2) The foreign tourist commits to leave China's mainland at the departure port of Shanghai within 17 days with the tax-free goods exported in the foreign tourist's personal carry-on or checked luggage. The foreign tourist can stay in China's mainland for no more than 183 consecutive days.

(3) The foreign tourist has purchased goods and obtained the VAT invoice and the Tax Refund Application Form.

(4) The foreign tourist holds a credit card ready for a pre-authorization guarantee.

Procedures:

(1) Confirm the tax refund amount and use a credit card for pre-authorization.

(2) Sign the Notification on Rights and Obligations for Departure Tax Refund Service and receive the tax refund in cash.

Notes

(1) The tourists shall go through the Customs verification process for tax refunds by the regulations when leaving China's mainland.

(2) The tourists can put the tax refund-related documents into the mailboxes for Buy & Refund Service at their departure port to confirm and process the tax refund without queuing and face-to-face contact.

(3) If the requirements for the Buy & Refund Service are not met, the tax refund agency will deduct the fee through pre-authorization. If the general requirements for common departure tax refunds are met, the tourists still can go through the common process to get the tax refund.

Departure tax refund policy

The Departure Tax Refund Policy of China refers to a refund of VAT on the tax-free goods purchased by overseas travelers, including those from Hong Kong,

Macau and Taiwan, in tax-free stores when they leave China's mainland from the departure port.

Q&A

Q: What are the conditions to be met for overseas travelers departing China to apply for a tax refund?

A: (1) The amount of tax-refundable items purchased by the same overseas travelers in the same tax refund shop on the same day reaches 500 yuan.

(2) Tax refundable items have not yet been activated or consumed.

(3) The departure date is not more than 90 days from the purchase date of the tax refundable goods.

(4) When leaving China's mainland, the purchaser must carry the refundable goods by himself or herself or consign them with their luggage.

Q: What is the currency of the tax refund? What is the method of refunding tax?

A: The currency of the tax refund is RMB. There are 3 methods of tax refunds, including cash, bank transfer, and third-party convenient payment. If the amount of tax refund does not exceed 10,000 yuan, you are free to choose the refund method. If the amount of tax refund exceeds 10,000 yuan, you may choose bank transfer or third-party convenient payment for the tax refund.

Q: How is the departure tax refund calculated?

A: It shall be calculated based on the VAT invoice amount (including VAT) of the tax-free goods and the tax refund rate is 11 percent. The calculation formula is:

VAT refundable = sales invoice amount (including VAT) of the tax-free goods × tax refund rate (11 percent)

Actual VAT refunded = refundable VAT - service fee charged by tax refund agencies (2 percent)

Since April 1, 2019, the tax refund rate is 11 percent for goods purchased by overseas travelers subject to a 13 percent tax rate. For goods purchased by overseas travelers subject to a tax rate of 9 percent, the tax refund rate is 8 percent.

Q: How can overseas travelers apply for a tax refund when departing China?

A: Three steps: application for the refund, verification by Customs, review and refund by agencies.

(1) Before leaving China's mainland, overseas travelers who apply for a tax refund after purchasing tax-free goods in tax-free stores shall ask the tax-free stores for the Refund Application Form and VAT invoices for tax-free goods.

(2) At the port of departure, overseas travelers shall submit their goods, the VAT invoices for tax-free goods, and a Refund Application Form to the Chinese Customs for verification.

(3) Before handling the tax refunds, tax refund agencies who received applications from overseas travelers must first collect the valid identity documents of the overseas travelers, verify the following items and seek Customs' approval:

A. The information on the departure tax refund is complete.

B. The information of the overseas travelers contained in the Refund Application Form is consistent with the information on the valid identity documents.

C. The Refund Application Form has been verified and signed by Customs.

D. The departure date is not more than 183 days from the last entry date.

E. The purchase date of the tax refund goods is not more than 90 days from the departure date.

F. The Refund Application Form is consistent with the information in the management system of a departure tax refund.