China will expand its instant tax refund for purchases by overseas tourists nationwide in a move to boost inbound travel and consumption, the State Taxation Administration said on Tuesday.

The service, which allows foreign visitors to receive tax rebates immediately after buying, rather than upon departure, was previously piloted in cities including Beijing, Shanghai, Guangzhou, Chengdu, Hangzhou and Shenzhen.

Under the new rules, tourists making purchases at designated stores can receive their refunds on-site after completing a credit card pre-authorization. Upon departure, customs will verify the traveler's identity and the goods, and the refund agency will lift the pre-authorization once all information is confirmed.

Li Xuhong, deputy dean of the Beijing National Accounting Institute, said, "By tapping into inbound consumption potential, the move would improve China's tourism climate and help promote high-quality economic growth."

I. What is departure tax refund?

Departure tax refund refers to the refund of value-added tax on goods purchased by overseas tourist at tax refund shops when they depart from the departure port.

Overseas tourists refer to foreigners and compatriots from Hong Kong, Macao, and Taiwan who have resided continuously in China for no more than 183 days.

II. What is "instant tax refund"? What conditions must overseas travelers meet to enjoy this service?

The "instant tax refund" service measure is a convenient measure for departure tax refund. It means that overseas tourists can receive an equivalent amount of RMB on the spot at the "instant tax refund" shop after signing an agreement and completing a credit card pre-authorization when purchasing tax refund items at shops where the departure tax refund policy has been implemented.

Overseas tourists who wish to enjoy this service measure must meet the following conditions: pass the customs inspection when departing, leave the designated port within the agreed period as stipulated in the agreement, and comply with the departure tax refund policy regulations.

III. What conditions must items meet to be eligible for the instant tax refund?

Items eligible for the current departure tax refund policy fall under the category of the instant tax refund.

IV. What conditions must be met to become a "instant tax refund" shop?

Shops that have implemented the "instant tax refund" in the region, and are willing to provide the service, can become a "instant tax refund" shop after reaching an agreement with the local tax refund agency on matters such as prepayment.

V. Process for overseas travelers to handle the "instant tax refund" 

Overseas tourists who wish to enjoy the "instant tax refund" need to go through three main steps: First, the shop issues a prepayment. After signing the agreement for the departure tax refund "instant tax refund," the shop will handle the credit card pre-authorization for the overseas traveler, issue the "Overseas Traveler Shopping Departure Tax Refund Application Form," and collect the prepayment on-site. Second, customs inspection. Overseas travelers who wish to enjoy the "instant tax refund" departure tax refund should present the tax refund items, the "Overseas Traveler Shopping Departure Tax Refund Application Form," the sales invoice for the tax refund items, and a valid ID to customs for declaration and inspection when departing. Third, tax refund agency review. Overseas travelers should submit their passport and other valid ID, the "Overseas Traveler Shopping Departure Tax Refund Application Form" with the customs inspection stamp, and the sales invoice for the tax refund items to the tax refund agency in the isolation area at the departure port. The tax refund agency will review the relevant documents and, if the traveler meets the conditions specified in the agreement for leaving the designated port within the agreed period and complying with the current departure tax refund policy regulations, the tax refund agency will release the credit card pre-authorization, complete the tax refund process, and consider the prepayment as refunded tax.

VI. What is a protocol letter? Does the protocol letter have to be signed by the overseas tourists themselves?

The protocol letter is signed by overseas tourists who choose to enjoy the "instant tax refund", declaring that they are aware of the rights and obligations of the departure tax refund "instant tax refund," promising to depart from the designated port within the agreed period, agreeing to use a credit card pre-authorization as a guarantee, and obtaining a prepayment in accordance with the agreed limit and payment method. The protocol letter is provided free of charge by the "buy now, refund immediately" store to overseas travelers.

The protocol letter must be signed by the overseas tourists themselves. The "instant tax refund" store or tax refund agency should properly retain the signed protocol letter by the overseas tourists. The unit responsible for retaining the protocol letter is determined through negotiation between the "instant tax refund" store and the tax refund agency.

VII. What is a credit card pre-authorization?

Credit card pre-authorization refers to the store or agency paying a prepayment to overseas travelers who enjoy the "instant tax refund" and freezing the corresponding amount on their credit card.

Credit card pre-authorization is processed by the "instant tax refund" store or tax refund agency for overseas tourists. The pre-authorization amount should be equal to the prepayment they apply for. The cancellation and deduction of the credit card pre-authorization for overseas travelers are handled by the tax refund agency providing the "instant tax refund" at the location of the store. The "instant tax refund" store and tax refund agency should properly retain the bank documents related to the credit card pre-authorization business.

VIII. What is a prepayment? What are the ways for overseas tourists to obtain prepayment?

A prepayment is a payment made in person at the "instant tax refund" store to overseas travelers enjoying the "instant tax refund", in the form of Chinese currency equivalent to the tax refund amount. Specific forms include cash payment and electronic payment.

The prepayment is advanced by the "instant tax refund" store or tax refund agency, and the advancing party, specific forms, and limit standards are determined through negotiation between the provincial tax authorities, "instant tax refund" stores, and tax refund agencies.

IX. How should the amount of prepayment obtained by overseas travelers be calculated?

The amount of prepayment that overseas tourists can obtain is calculated based on the actual VAT amount (including VAT) on the VAT invoice of the refundable items, namely:

Prepayment amount = Actual VAT amount

Actual VAT amount = Sales invoice amount of the refundable items (including VAT) × Tax refund rate - Tax refund agency handling fee

X. What should be done if overseas tourists fail to fulfill the provisions of the protocol letter, exceed the commitment period, or do not depart from the designated port as promised?

For tourists who fail to fulfill the provisions of the protocol letter, exceed the commitment period, or do not depart from the designated port as promised, the tax refund agency shall, within 3 working days from the expiration of the tourist's promised departure period, recover the prepayment through credit card pre-authorization deduction. When the tourist actually departs, the tax refund agency at the departure location will handle the tax refund according to current regulations.