China introduces instant tax refunds for foreign tourists

Chinese authorities have announced the rollout of a new instant value-added tax (VAT) refund system for foreign tourists. The measure is aimed at boosting inbound tourism and increasing spending by foreign visitors in the country.

Under the "Buy Now, Refund Immediately" initiative, foreign shoppers will be able to get their tax refund on the spot — right at the time of purchase. Previously, tourists had to wait until leaving China to process a refund. Now, provided a credit card is pre-authorised, the tourist receives the refund instantly. Inspection of purchased goods at the border remains mandatory: if the inspection is passed successfully, the pre-authorisation hold on the funds is released.

Results from the pilot stage are impressive: in 2024, in the regions where the system was tested — Beijing, Shanghai, Shenzhen, Sichuan, Zhejiang, and Guangdong — sales grew at shops participating in the programme. According to Chengdu's tax bureau, a year after the pilot launched, sales at participating stores in Sichuan exceeded 250 million yuan (about €29 million), representing growth of more than 400% year-on-year.

According to Li Xuhong, deputy director of the Beijing National Accounting Institute, the initiative helps raise service standards, create a more comfortable environment for tourists, and boost domestic consumption, which in turn supports the country's sustainable economic development.

Experts also view the new tax policy as a response to growing tariff pressure from the US. Recent changes in American legislation involve imposing a 120% duty on Chinese online retail, including platforms such as AliExpress, Shein, and Temu. These companies had previously made extensive use of the small-parcel export scheme (shipments valued up to $800), which minimised their tax burden. In 2023, more than a billion parcels were shipped to the US under this scheme. The new tariffs make Chinese goods more expensive, which could reduce demand for them abroad.

Amid weakening external demand, China is stepping up measures to boost domestic consumption by developing inbound tourism. In particular, in addition to the "Buy Now, Refund Immediately" programme aimed at increasing spending by foreign visitors, new rules on visa-free transit for up to 10 days took effect at the end of 2024 for citizens of 54 countries, including Russia. These measures are viewed as tools for economic support through attracting tourists. According to China's National Immigration Administration, the number of foreign visits to the country doubled in 2024. By comparison, the US is expected to see foreign tourist revenue fall by around $20 billion in 2025.