Shanghai records big jump in departure tax refund

Over the past month, as China implemented optimized departure tax refund policies, Shanghai experienced an 86 percent increase in total sales from this channel, with the refunded amount jumping 77 percent year-on-year, surpassing all other locations in the country.

Shanghai Municipal Tax Service released the above data at the end of last month.

According to the set of measures, which took effect in the end of April, the minimum purchase threshold eligible for departure tax refunds in China has been lowered to 200 yuan ($27.8) of purchase made within the same store, down from 500 yuan. The upper limit for cash refund has been raised to 20,000 yuan, up from the previous ceiling of 10,000 yuan.

Chen Xiaoling, general manager of Shanghai's Florentia Village, a luxury outlet, said that the changed limits have benefited both higher valued products and daily necessities. The 200-yuan limit makes the favorable policy more easily accessible to overseas tourists to China.

Over the past month, Florentia Village has received more than 100 applications for departure tax refunds with their respective purchase lower than 500 yuan, according to Chen.

According to Shen Ying, finance director of Fast Retailing (Shanghai) Trading Co Ltd, travelers only need to buy one item to apply for tax refund under the new measures. A 200-yuan product can provide 18 yuan of tax refund. This has largely boosted tourists consumption enthusiasm, translating into rising traffic flow within their Uniqlo stores, said Shen.

The new measures have also relaxed the registration requirements for tax refund stores. Newly opened stores with M-level tax credit, which refers to newly established enterprises or those with no operating income during the monitored period but meeting certain scoring standards, are allowed to apply for tax refund stores when meeting other regulations.

Shanghai Pumo Brand Management Co Ltd, a startup founded in June last year, applied to register one of its stores in central Shanghai as a tax fund refund store on April 30. The approval was granted within the day.

Shanghai saw an additional 120 tax refund stores registered over the past month, with the total number exceeding 1,200, according to the Shanghai Municipal Tax Service.

Meanwhile, Shanghai has been improving its services allowing consumers getting tax refunds right at the stores where they have made purchases. As of date, there are 60 such stores in the city. There are also 11 shopping centers or malls providing collective tax refunds for different stores.

Commercial complex Plaza 66 in central Shanghai's Jing'an district was the first such shopping mall in the city to provide collective tax refund services. According to Janice Cheung, director of Chinese mainland business operation for Hang Lung Properties, Plaza 66 has dealt with over 280 tax refunds as of May 27, outnumbering the whole year figure in 2024.

The new policy has further consolidated Shanghai's appeal as an international shopping destination. More brands will be thus be attracted to open their first stores or flagship stores in the city, she added.