Improved tax refund policy spurs foreign tourist spending

China is registering a sharp increase in foreign tourist spending after the introduction of a series of measures to refine its tax refund policy, data released on Tuesday by the State Taxation Administration showed.

One month after the nation introduced its revamped departure tax refund policy on April 27, the number of processed refund transactions soared 116 percent year-on-year, while sales at participating stores surged 56 percent.

The new policy aims to make shopping in China more seamless and rewarding for international visitors. Key changes include lowering the minimum spending threshold for claiming a refund, raising the ceiling for cash refunds, expanding the number of eligible retailers and widening the scope of refundable goods.

At the heart of the new policy is a "refund-upon-purchase" model, which allows foreign tourists to claim value-added tax refund instantly at the cash register, rather than waiting until they leave the country.

For example, a foreign tourist purchasing a Huawei Mate XT smartphone priced at 23,999 yuan ($3,340) could get an in-store refund of around 2,500 yuan. The savings are enough to cover a high-speed train ticket from Beijing to Shanghai and a night's stay at a decent hotel.

The effects of the policy have been swift. Transactions under the refund-upon-purchase model increased 32-fold in one month, while the sales volume tied to those transactions surged 50-fold, according to the tax authority.

As many as 1,303 new tax refund stores have been introduced nationwide, bringing the total number of such stores to 5,196, an increase of 40 percent compared with the end of 2024, it said.

Li Xuhong, deputy dean of the Beijing National Accounting Institute, said, "The policy has tapped into the latent potential of inbound consumption, and it will drive high-quality economic growth in the domestic market as a whole."

The tax reform is part of a broader push to revive inbound travel. It coincides with other initiatives such as the expansion of China's unilateral visa-free transit to 240 hours for eligible foreign travelers.

"Such efforts stand as an important measure taken by China to match international high-standard economic and trade rules," said Andrea Yue, partner of indirect tax services at market consultancy EY China.

"As China is expected to become the world's largest inbound tourism market this year, improving the openness of the consumption sector in the country can help enhance economic resilience and showcase the attractiveness of the Chinese market," she added.

chengyu@chinadaily.com.cn