Guangdong Offers Departure Tax Refund to Overseas Visitors from 1 July

Guangdong's Department of Finance disclosed on 27 June that, as the province with the largest number of inbound tourists, Guangdong (excluding Shenzhen) will start offering departing overseas visitors VAT refund for their purchases from 1 July 2016. The actual tax refund rate is 9%.

Departure tax refund for shopping of overseas visitors means offering overseas visitors VAT refund for tax-refundable goods bought at tax refund shops on departure. The beneficiaries include overseas visitors and those from Hong Kong, Macau and Taiwan who stay on the Chinese mainland for less than 183 days. The same visitor making purchases on the same day in the same designated tax refund shop for an amount not less than Rmb500, the tax refundable items have not been opened or consumed, the departure date of the visitor does not exceed 90 days from the purchase of the tax refundable items, and the refundable items are carried by the visitor or with checked-in baggage when he or she leaves China, can claim VAT refund on the tax refundable items.

Tax refundable items do not include: 1) items listed on the List of Articles Prohibited or Restricted by the PRC from Entering or Leaving the Territory; 2) items eligible for VAT exemption policies purchased at tax refund shops; and 3) other items prescribed by the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation.

Overseas visitors may apply for tax refund by presenting the Refund Application Form to the tax refund agency inside the restricted area of the port of departure. Visitors may choose bank transfer if the tax refund exceeds Rmb10,000.

The rate of VAT refund is 11%, but the tax refund agency will deduct 2% of the VAT as handling charge. This means that after shopping at a tax refund shop, overseas visitors can apply for tax refund at the rate of 9% of the invoiced amount of the tax refundable item (VAT inclusive).

Statistics show that some 105 million visitors entered China through Guangdong ports in 2015, accounting for 78.5% of the national total. The policy of offering departing overseas visitors VAT refund for their purchases can make the tax policy play a positive role in boosting tourist shopping, enhance the influence of Guangdong as an international tourist destination, and further align the province’s development with the Belt and Road strategy.