Beijing and Shanghai are hoping to entice more overseas tourists by offering a tax refund.
As of July 1, all tourists who stay in the cities for up to 183 days are eligible for a refund of 11 percent on all consumer goods purchased exclusively at designated department stores. Visitors from Hong Kong, Macao, and Taiwan are also eligible for the rebate. However, as applicants are required to pay a 2 percent administration fee, the actual rebate is just 9 percent. Participating stores have said they will display a “tax free” sign.
To qualify for the rebate, you have to spend a minimum of 500 yuan (about $82) in any one store in a single day. The refund will be paid in cash in Chinese currency, or transferred to the applicant’s bank account. The rebate can be claimed within 90 days of leaving China. In Shanghai, visitors can pick up their rebate at either of the city’s airports prior to leaving the country.
An earlier proposal of the tax rebate only covered Shanghai and required tourists to purchase at least RMB 800.
Senior retail expert Ding Lihuo had previously warned drastic action was required to secure the loyalties of fickle consumers:
If we are slow to act, many other countries will implement similar laws and lower customs taxes and duty-free, and thus be able to snatch up middle and high-end consumers.
This tax rebate program is the first of its kind in China. In 2011, Hainan explored a pilot program that offered a departure tax rebate, however the program only covered 324 items.