China Upgrades Tax Refund Policy to Boost Inbound Tourism

China has unveiled a major upgrade to its departure tax refund policy for international tourists, introducing eight measures designed to make tax refunds faster, simpler, and more accessible as the country seeks to sustain its surging inbound tourism boom. The policy, issued jointly by six government departments on May 12, 2026, marks the “2.0 version” of China’s tax refund framework, arriving just over a year after the initial reforms in April 2025.

According to People’s Daily, the new measures include expanding tax refund store coverage to achieve “basic full coverage” at key commercial areas, scenic spots, and ports, as well as introducing a random inspection system for purchases under 10,000 yuan (approximately $1,380) that will significantly reduce customs waiting times.

Context: A Booming Inbound Tourism Sector

The policy upgrade comes amid explosive growth in China’s inbound tourism market. In 2025, China welcomed 35.17 million foreign tourists, a 30.5% increase year-on-year, while total inbound tourist spending rose 39.2%, according to data cited by the Chinese Government Website. Departure tax refund sales nearly doubled in 2025, with the year’s total equaling the combined sales of the entire decade from 2015 to 2024.

The number of tax refund recipients surged to 270,000 in 2025 — three times the 2024 figure — while the number of registered tax refund stores expanded to approximately 14,000, roughly four times the level at the end of 2024. In the first quarter of 2026 alone, tax refund transactions were up nearly fivefold year-on-year.

Key Upgrades in the 2.0 Policy

The eight measures in Document No. 74 (2026) — formally titled the “Notice on Intensifying Efforts to Optimize Tax Refund (Departure) Measures to Expand Inbound Consumption” — target the most common pain points faced by international shoppers.

Faster customs clearance. Starting July 1, 2026, purchases under 10,000 yuan will be subject to random spot-checks rather than mandatory per-item physical verification. This change, modeled on international best practices, is expected to dramatically reduce waiting times at customs counters.

Paperless processing. Also effective July 1, the tax refund process will go fully digital. Customs and agency officials will input passenger identity information, and the system will automatically retrieve refund application forms and invoice data, eliminating the need for paper documents. Banks including Bank of China and ICBC have already developed self-service refund machines deployed in shopping malls.

Cross-region “buy now, refund now.” The popular instant refund service will now support cross-region mutual recognition, allowing tourists to complete their refund at a different port from where they made their purchase. This solves the long-standing problem of “shopping in one city, departing from another.” The uniform departure period for instant refunds has also been standardized to 28 days across all regions.

Expanded store network. The policy encourages more qualified retailers to register as tax refund stores, with a particular focus on key commercial districts, scenic areas, markets, and ports with high foreign tourist traffic. Exhibition tax refund service platforms will also be established at major trade fairs including the China International Import Expo (CIIE), Canton Fair, and China International Consumer Products Expo (CICPE).

Strategic Significance

The policy is part of a broader ecosystem of measures designed to position China as a premier global tourism destination. As China News Service noted, “The departure tax refund is not only a consumption incentive tool but also an important window to showcase Chinese goods and services.”

China has simultaneously expanded visa-free transit policies, improved international payment acceptance through platforms like Alipay and WeChat Pay, and allocated 20 billion yuan ($2.76 billion) to support 15 pilot cities in building国际化 (internationalized) consumption environments. The “Shop in China” (购在中国) brand campaign is promoting Chinese products and shopping experiences both domestically and abroad.

Mo Jie, a commentator writing in Guangming Daily, observed that “the 2.0 version policy reflects China’s confidence in promoting high-level opening up, and will add fuel to the already heating ‘China Travel’ and ‘China Shopping’ trends.”

Shifting Consumer Behavior

A notable trend underpinning the policy is the structural shift in how foreign tourists spend in China. Visitors are moving beyond单纯的 (simple) shopping toward deeper experiential consumption — seeking本土 (local) lifestyle experiences, cultural immersion, and unique local products. This creates new opportunities for innovative consumer products and services, from定制 (custom-tailored) clothing to traditional wellness experiences like tea ceremonies and acupuncture.

What to Watch

The key provisions — random inspections for small purchases and paperless processing — take effect on July 1, 2026. Industry observers will be watching how smoothly the new systems are implemented at major ports and whether the expanded store network can keep pace with surging demand. The success of the 2.0 policy will also depend on how effectively China communicates these changes to international travelers through its overseas promotion campaigns.

With inbound tourism showing no signs of slowing, the upgraded tax refund policy represents a strategic bet on consumption-driven growth — one that aligns with China’s broader “dual circulation” strategy of linking domestic consumption with international engagement.