In an effort to enhance the shopping experience for foreign visitors and further optimize the implementation of VAT refund policies, the State Taxation Administration of China has formally announced the nationwide rollout of an “Instant Refund at the Point of Purchase” mechanism for overseas tourists (commonly referred to as “Buy-and-Refund” model), which was implemented on April 4, 2025. This new policy follows earlier pilot programs and marks a significant shift toward real-time processing of VAT refunds under China’s existing departure tax refund system.
I. What Is the “Buy-and-Refund” VAT Refund Model?
Under the traditional VAT refund system for foreign tourists, eligible purchases were refunded only after a series of steps at the point of departure, including customs verification and post-departure reimbursement. The “Buy-and-Refund” mechanism streamlines this process by allowing foreign shoppers to receive an immediate cash equivalent of the refund—referred to as a prepaid amount—directly at participating stores, contingent upon certain conditions being met at departure.
Here’s how it works - when a foreign visitor purchases eligible goods at a designated “Buy-and-Refund” store, they sign a tripartite agreement and complete a credit card pre-authorization. In return, the store pays the visitor a cash amount equal to the VAT refund they would normally receive. Upon departure from China, the tourist must pass customs inspection at an approved port of exit, within the time and location stipulated in the agreement. If all conditions are fulfilled, the refund agency will cancel the pre-authorization and finalize the refund transaction. If the tourist fails to meet the conditions (e.g., they exit through a different port or miss the agreed timeline), the refund agency is authorized to recover the prepaid amount by charging the pre-authorized credit card. This arrangement essentially functions as a conditional refund advance, combining real-time convenience for the tourist with a safeguard mechanism for compliance enforcement.
II. Implementation Framework and Eligibility
The policy is applicable in regions where the departure tax refund scheme has already been implemented. Provincial tax authorities are authorized to develop localized implementation plans and activate the “Buy-and-Refund” function within the national VAT refund information system.
For a store to participate as a “Buy-and-Refund” vendor, it must meet implementation requirements and formally coordinate with local refund agencies regarding the prepayment procedures. Once an agreement is reached, the store can provide the service directly to eligible tourists. Tax bureaus at all provincial and municipal levels are instructed to collaborate with local cultural tourism, commerce, finance, and customs authorities to facilitate adoption, and to encourage more retailers and agencies to offer this service.
III. Step-by-Step Process for Foreign Tourists
To take advantage of the “Buy-and-Refund” system, foreign visitors must satisfy all conditions under the VAT refund regime and follow this four-step process:
1. Store Prepayment SetupAt the point of sale in a “Buy-and-Refund” store, the foreign shopper chooses the instant refund option. The store or its affiliated refund agency will provide a formal agreement, assist in processing the credit card pre-authorization, and issue the official Tax Refund Application Form. The prepaid refund amount is then disbursed on-site in Renminbi.
2. Customs Verification Upon DepartureWhen leaving China, the traveler must present the purchased goods, the refund application form, the original sales invoice, and a valid passport or identification to Chinese Customs for inspection and endorsement.
3. Refund Agent VerificationIn the customs isolation zone at the point of exit, the traveler submits the validated documents to the refund agent. Based on whether the traveler has complied with the agreement:
1) If all terms are met, the agent cancels the credit card hold, and the prepaid refund is finalized.2) If not, the agent charges the pre-authorized card to recover the funds.3) In cases where the traveler exits later or from a different port, the refund may still be processed manually, subject to verification.
IV. Final Settlement with Tax Authorities
Refund agents will submit applications to local tax authorities on a periodic basis to settle and reconcile the actual refund amounts disbursed under the program.
[Comment]
The expansion of the “Buy-and-Refund” mechanism signals China’s continued commitment to opening up its consumer market and streamlining administrative processes for international visitors. Tax professionals and cross-border business operators should closely monitor the implementation across regions, and advise clients accordingly—whether they are retailers seeking to join the program, or travelers looking to maximize their shopping experience in China.
I. What Is the “Buy-and-Refund” VAT Refund Model?
Under the traditional VAT refund system for foreign tourists, eligible purchases were refunded only after a series of steps at the point of departure, including customs verification and post-departure reimbursement. The “Buy-and-Refund” mechanism streamlines this process by allowing foreign shoppers to receive an immediate cash equivalent of the refund—referred to as a prepaid amount—directly at participating stores, contingent upon certain conditions being met at departure.
Here’s how it works - when a foreign visitor purchases eligible goods at a designated “Buy-and-Refund” store, they sign a tripartite agreement and complete a credit card pre-authorization. In return, the store pays the visitor a cash amount equal to the VAT refund they would normally receive. Upon departure from China, the tourist must pass customs inspection at an approved port of exit, within the time and location stipulated in the agreement. If all conditions are fulfilled, the refund agency will cancel the pre-authorization and finalize the refund transaction. If the tourist fails to meet the conditions (e.g., they exit through a different port or miss the agreed timeline), the refund agency is authorized to recover the prepaid amount by charging the pre-authorized credit card. This arrangement essentially functions as a conditional refund advance, combining real-time convenience for the tourist with a safeguard mechanism for compliance enforcement.
II. Implementation Framework and Eligibility
The policy is applicable in regions where the departure tax refund scheme has already been implemented. Provincial tax authorities are authorized to develop localized implementation plans and activate the “Buy-and-Refund” function within the national VAT refund information system.
For a store to participate as a “Buy-and-Refund” vendor, it must meet implementation requirements and formally coordinate with local refund agencies regarding the prepayment procedures. Once an agreement is reached, the store can provide the service directly to eligible tourists. Tax bureaus at all provincial and municipal levels are instructed to collaborate with local cultural tourism, commerce, finance, and customs authorities to facilitate adoption, and to encourage more retailers and agencies to offer this service.
III. Step-by-Step Process for Foreign Tourists
To take advantage of the “Buy-and-Refund” system, foreign visitors must satisfy all conditions under the VAT refund regime and follow this four-step process:
1. Store Prepayment SetupAt the point of sale in a “Buy-and-Refund” store, the foreign shopper chooses the instant refund option. The store or its affiliated refund agency will provide a formal agreement, assist in processing the credit card pre-authorization, and issue the official Tax Refund Application Form. The prepaid refund amount is then disbursed on-site in Renminbi.
2. Customs Verification Upon DepartureWhen leaving China, the traveler must present the purchased goods, the refund application form, the original sales invoice, and a valid passport or identification to Chinese Customs for inspection and endorsement.
3. Refund Agent VerificationIn the customs isolation zone at the point of exit, the traveler submits the validated documents to the refund agent. Based on whether the traveler has complied with the agreement:
1) If all terms are met, the agent cancels the credit card hold, and the prepaid refund is finalized.2) If not, the agent charges the pre-authorized card to recover the funds.3) In cases where the traveler exits later or from a different port, the refund may still be processed manually, subject to verification.
IV. Final Settlement with Tax Authorities
Refund agents will submit applications to local tax authorities on a periodic basis to settle and reconcile the actual refund amounts disbursed under the program.
[Comment]
The expansion of the “Buy-and-Refund” mechanism signals China’s continued commitment to opening up its consumer market and streamlining administrative processes for international visitors. Tax professionals and cross-border business operators should closely monitor the implementation across regions, and advise clients accordingly—whether they are retailers seeking to join the program, or travelers looking to maximize their shopping experience in China.