China Upgrades Departure Tax Refund
China has recently enhanced its departure tax refund policy as part of a broader strategy to increase inbound tourism and stimulate consumer spending. The policy, which allows foreign tourists to reclaim part of the VAT paid on goods purchased in China, is now more inclusive, accessible, and impactful than ever before.
Surging Uptake and Early Results
According to data from the State Administration of Taxation, the impact of the policy upgrade has been immediate and significant. In just the first month following implementation (April 27 to May 26, 2025), departure tax refund volumes rose by 116% year-on-year. Sales at participating tax refund stores increased 56%, while “buy and refund” transactions grew by a remarkable 32 times. More than 1,300 new stores joined the tax refund system, showing clear enthusiasm across the retail sector.
Making Tax Refunds More Accessible
The upgraded policy introduces key changes designed to reduce barriers for tourists. The minimum spending threshold to qualify for a refund has been lowered to 200 yuan, making even small souvenir purchases eligible. Additionally, the cash refund cap has been raised to 20,000 yuan, and payment methods now include mobile wallets and international bank cards—essential tools for modern travelers. Tax refund counters are now strategically located in airports, commercial centers, and major tourist attractions, ensuring greater convenience and wider coverage.
Part of a Broader Opening-Up Strategy
This tax refund reform is just one of several measures designed to strengthen China’s appeal to global travelers. Recent developments include expanded visa-free entry for dozens of countries, improved cross-border payment solutions, and better service infrastructure across transport, hospitality, and retail. Together, these steps signal a commitment to fostering a more welcoming and globally competitive tourism environment.
Driving Brand Recognition and Local Growth
Beyond tourism, the upgraded policy is also contributing to greater international exposure for Chinese brands. Sales data from top retail locations reflects a surge in interest in both traditional and contemporary Chinese products. For instance, in May 2025, the number of tax refund invoices issued at Shanghai’s First Department Store increased by 338% year-on-year, with significant growth in purchases of domestic heritage and trendy products. This trend highlights a rising appreciation for “Made in China” goods and suggests that inbound tourism is helping strengthen domestic brand identity and confidence.
Transforming Travel into Long-Term Economic Value
The policy is not just a stimulus for tourism—it’s a strategic tool for long-term economic development. In the first quarter of 2025, China welcomed over 9.2 million foreign visitors, a 40.2% year-on-year increase, with 71.3% entering under visa-free arrangements. With this increase in visitor numbers comes increased consumer activity, helping drive growth in retail, services, logistics, and beyond. The upgraded tax refund system contributes directly to this dynamic by turning tourism flows into spending power, fostering a cycle of increased demand and improved service delivery.
Conclusion: A Small Policy, Big Economic Implications
The enhancement of China’s departure tax refund policy represents more than a minor adjustment—it’s a key piece of the country’s broader effort to strengthen its global economic position. By lowering entry barriers for foreign consumers and supporting the visibility of local brands, the policy creates value both at the point of sale and across the broader economy. As China continues to refine its business and travel environment, the upgraded tax refund system stands as a clear example of how targeted policy can deliver measurable economic gains while enhancing the country’s global appeal.