China Tax: New Rules Is Released to Speed Up Sales Tax Refunds for Travelers
Published 20 May 2026
Xia Yu
On 18 May 2026, the Ministry of Commerce, jointly with the Ministry of Finance, the Ministry of Culture and Tourism, the General Administration of Customs, the State Taxation Administration and the National Immigration Administration, issued the Circular on Intensifying Optimization of Departure Tax Refund Measures to Expand Inbound Consumption (“2.0 Version Circular”), the core provisions of which take effect on 1 July 2026. This Circular represents China’s second systematic upgrade of the departure tax refund system, following the Circular on Further Optimizing Departure Tax Refund Policies to Expand Inbound Consumption (“1.0 Version Policy”) issued on 26 April 2025. The essence of the 2.0 Version is not a higher refund amount, but making the refund process faster, nationally portable and paperless. For most inbound travelers, queuing for physical inspection, being restricted to refunds at the city of purchase, and worrying about lost documents will no longer be issues.
1.0 Version: Notable Achievements but Three Pain Points
In April 2025, China introduced the 1.0 Version Policy, which focused on three main changes: (1) lowering the minimum purchase amount for departure tax refund from RMB 500 to RMB 200 (approx. US$ 146.34 to 29.26); (2) raising the cash refund limit from RMB 10,000 to RMB 20,000 (approx. US$ 1,462.69 to 2,925.38); and (3) expanding the eligibility conditions for departure tax refund stores by adding tax credit rating M to the existing ratings A and B, and permitting newly established stores to become tax refund stores provided they meet other relevant requirements.
Since the implementation of the 1.0 Version Policy, the volume of departure tax refund transactions has grown significantly. In 2025, national departure tax refund sales increased by nearly 100% year-on-year, and the sales volume for that single year essentially equaled the total of the ten-year period from 2015 (when China started the departure tax refund scheme) through 2024. In the first quarter of 2026, the number of refund transactions rose nearly fivefold year-on-year. The number of travelers obtaining refunds reached 270,000, a threefold increase over 2024. The number of tax refund stores surged from approximately 3,500 at the end of 2024 to 14,000 — about four times the end‑2024 level and 3.2 times that of the same period in the previous year. In terms of processing efficiency, the number of travelers using the “instant refund upon purchase” service increased by 12.9 times year-on-year, with sales and refund amounts rising 9.3 times. Overall, the number of travelers obtaining refunds grew by 367%, and refundable sales and refund amounts rose by 90%. Together with unilateral visa waivers and payment facilitation measures, departure tax refund policies helped drive inbound consumption and travel service exports up by nearly 40% and 50%, respectively.
However, the surge in transactions also exposed three pain points: (1) long queues – item‑by‑item physical inspection caused congestion at ports of departure; (2) non‑mutual recognition – a traveler who obtained an “instant refund upon purchase” in Beijing could not complete the final verification when departing from Shanghai; and (3) fear of lost documents – loss of paper refund applications and invoices made refunds impossible. The 2.0 Version is precisely a targeted surgery for these three pain points.
How the 2.0 Version Addresses the Three Pain Points of the 1.0 Version
The 2.0 Version Circular contains a total of eight measures, the core changes of which are precisely to address the three pain points of the 1.0 Version:
1. No more queuing for physical inspection for all (addressing long queues): As from 1 July 2026, for a single refund application amount of less than RMB 10,000 (approx. US$ 1,462.69), Customs will conduct random sampling inspections at a prescribed ratio. For a single refund application amount of RMB 10,000 (approx. US$ 1,462.69) or more, item‑by‑item physical inspection remains required. The waiting time at ports will be dramatically reduced for most ordinary tourists.
2. National portability of refunds (addressing non‑mutual recognition): “Instant refund upon purchase” will achieve mutual recognition across different locations and a uniform 28‑day departure deadline (calculated from the date of the purchase invoice), completely breaking the previous fragmentation of “shop in city A, depart from city A” and upgrading refund services from a city‑by‑city approach to a standardized service under the framework of a unified national market. Multi‑city travelers no longer need to return to the original shopping city, offering greater itinerary flexibility.
3. Complete transition to paperless processing (addressing fear of lost documents): As from 1 July 2026, Customs and refund agents will be permitted to conduct online verification of refund applications and invoices for refundable goods and to process the refund, thereby achieving full‑process paperless processing for tax refunds. Paper documents are no longer mandatory (travelers who prefer paper may still use them), and travelers no longer worry about losing documents, and merchants need not retain paper records.
In addition, related supporting measures are also involved, such as achieving “basic full coverage” of tax refund stores in key business districts, scenic areas and ports; setting up dedicated refund service zones at major exhibitions such as the China International Import Expo (CIIE), the China Import and Export Fair (Canton Fair) and the China International Consumer Products Expo; increasing international flight routes; and enhancing payment facilitation.
Legal Risk Reminders
The facilitation brought by the 2.0 Version Circular does not mean relaxed supervision. The following three red lines deserve special attention:
1. Legal consequences of false tax refunds: Falsifying transactions, fraudulently using another person’s refund application, or declaring non‑personal‑use goods for tax refund may, in accordance with the Implementing Regulations of the Customs Law of the People’s Republic of China on Administrative Penalties, result in a fine of one to five times the evaded tax amount, and be recorded in the individual’s credit record, which may affect future visa applications and entry into China.
2. Grey area of daigou (proxy buying) activities: Daigou conducted for profit does not constitute “personal use”. Even if a single invoice is for an amount below RMB 10,000 (approx. US$ 1,462.69), Customs may comprehensively determine on the basis of quantity, frequency, social media records, etc. that the activity is commercial in nature, and may deny the refund or even impose administrative penalties.
3. Discretionary power over “reasonable quantity for personal use”: Purchasing multiple units of the same product (for example, five identical handbags) may lead Customs to determine, based on the quantity, that the goods are not for personal use. Travelers are advised to retain supporting evidence such as gift descriptions, company gift purchase orders, etc.
Conclusion
China’s departure tax refund 2.0 Version does not change the refund rate or adjust the minimum purchase amount; it does only one thing: exchange procedural efficiency for consumption growth. Through the three moves of small‑amount random sampling, mutual recognition across different locations, and paperless processing, it upgrades “being able to obtain a refund” to “obtaining a refund easily, quickly, and anywhere nationwide”.
1.0 Version: Notable Achievements but Three Pain Points
In April 2025, China introduced the 1.0 Version Policy, which focused on three main changes: (1) lowering the minimum purchase amount for departure tax refund from RMB 500 to RMB 200 (approx. US$ 146.34 to 29.26); (2) raising the cash refund limit from RMB 10,000 to RMB 20,000 (approx. US$ 1,462.69 to 2,925.38); and (3) expanding the eligibility conditions for departure tax refund stores by adding tax credit rating M to the existing ratings A and B, and permitting newly established stores to become tax refund stores provided they meet other relevant requirements.
Since the implementation of the 1.0 Version Policy, the volume of departure tax refund transactions has grown significantly. In 2025, national departure tax refund sales increased by nearly 100% year-on-year, and the sales volume for that single year essentially equaled the total of the ten-year period from 2015 (when China started the departure tax refund scheme) through 2024. In the first quarter of 2026, the number of refund transactions rose nearly fivefold year-on-year. The number of travelers obtaining refunds reached 270,000, a threefold increase over 2024. The number of tax refund stores surged from approximately 3,500 at the end of 2024 to 14,000 — about four times the end‑2024 level and 3.2 times that of the same period in the previous year. In terms of processing efficiency, the number of travelers using the “instant refund upon purchase” service increased by 12.9 times year-on-year, with sales and refund amounts rising 9.3 times. Overall, the number of travelers obtaining refunds grew by 367%, and refundable sales and refund amounts rose by 90%. Together with unilateral visa waivers and payment facilitation measures, departure tax refund policies helped drive inbound consumption and travel service exports up by nearly 40% and 50%, respectively.
However, the surge in transactions also exposed three pain points: (1) long queues – item‑by‑item physical inspection caused congestion at ports of departure; (2) non‑mutual recognition – a traveler who obtained an “instant refund upon purchase” in Beijing could not complete the final verification when departing from Shanghai; and (3) fear of lost documents – loss of paper refund applications and invoices made refunds impossible. The 2.0 Version is precisely a targeted surgery for these three pain points.
How the 2.0 Version Addresses the Three Pain Points of the 1.0 Version
The 2.0 Version Circular contains a total of eight measures, the core changes of which are precisely to address the three pain points of the 1.0 Version:
1. No more queuing for physical inspection for all (addressing long queues): As from 1 July 2026, for a single refund application amount of less than RMB 10,000 (approx. US$ 1,462.69), Customs will conduct random sampling inspections at a prescribed ratio. For a single refund application amount of RMB 10,000 (approx. US$ 1,462.69) or more, item‑by‑item physical inspection remains required. The waiting time at ports will be dramatically reduced for most ordinary tourists.
2. National portability of refunds (addressing non‑mutual recognition): “Instant refund upon purchase” will achieve mutual recognition across different locations and a uniform 28‑day departure deadline (calculated from the date of the purchase invoice), completely breaking the previous fragmentation of “shop in city A, depart from city A” and upgrading refund services from a city‑by‑city approach to a standardized service under the framework of a unified national market. Multi‑city travelers no longer need to return to the original shopping city, offering greater itinerary flexibility.
3. Complete transition to paperless processing (addressing fear of lost documents): As from 1 July 2026, Customs and refund agents will be permitted to conduct online verification of refund applications and invoices for refundable goods and to process the refund, thereby achieving full‑process paperless processing for tax refunds. Paper documents are no longer mandatory (travelers who prefer paper may still use them), and travelers no longer worry about losing documents, and merchants need not retain paper records.
In addition, related supporting measures are also involved, such as achieving “basic full coverage” of tax refund stores in key business districts, scenic areas and ports; setting up dedicated refund service zones at major exhibitions such as the China International Import Expo (CIIE), the China Import and Export Fair (Canton Fair) and the China International Consumer Products Expo; increasing international flight routes; and enhancing payment facilitation.
Legal Risk Reminders
The facilitation brought by the 2.0 Version Circular does not mean relaxed supervision. The following three red lines deserve special attention:
1. Legal consequences of false tax refunds: Falsifying transactions, fraudulently using another person’s refund application, or declaring non‑personal‑use goods for tax refund may, in accordance with the Implementing Regulations of the Customs Law of the People’s Republic of China on Administrative Penalties, result in a fine of one to five times the evaded tax amount, and be recorded in the individual’s credit record, which may affect future visa applications and entry into China.
2. Grey area of daigou (proxy buying) activities: Daigou conducted for profit does not constitute “personal use”. Even if a single invoice is for an amount below RMB 10,000 (approx. US$ 1,462.69), Customs may comprehensively determine on the basis of quantity, frequency, social media records, etc. that the activity is commercial in nature, and may deny the refund or even impose administrative penalties.
3. Discretionary power over “reasonable quantity for personal use”: Purchasing multiple units of the same product (for example, five identical handbags) may lead Customs to determine, based on the quantity, that the goods are not for personal use. Travelers are advised to retain supporting evidence such as gift descriptions, company gift purchase orders, etc.
Conclusion
China’s departure tax refund 2.0 Version does not change the refund rate or adjust the minimum purchase amount; it does only one thing: exchange procedural efficiency for consumption growth. Through the three moves of small‑amount random sampling, mutual recognition across different locations, and paperless processing, it upgrades “being able to obtain a refund” to “obtaining a refund easily, quickly, and anywhere nationwide”.