China’s Departure Tax Refund 2.0 Takes Effect to Boost Trips
China officially entered the “2.0 era” of departure tax refunds on July 1, 2026, as core measures of the optimized policy took effect at airports and ports nationwide. The upgrade — jointly issued by six ministries including the Ministry of Commerce (MOFCOM), Ministry of Finance, and State Taxation Administration — aims to make tax refunds faster, simpler, and more accessible for international travelers, part of a broader push to stimulate inbound consumption.
From 1.0 to 2.0: A Policy Evolution
China first introduced its departure tax refund system in 2015, allowing foreign travelers to reclaim value-added tax (VAT) on goods purchased during their stay. The system received a major upgrade in April 2025 with the “1.0” optimized version, which delivered dramatic results. According to Xie Wen, Director of the Goods and Services Tax Department at the State Taxation Administration, the number of people processing departure tax refunds surged 367% year-on-year after the 1.0 rollout, while sales and refund amounts grew 90%. In 2025 alone, 270,000 travelers processed refunds — a threefold increase from 2024 — and the single-year sales volume nearly matched the cumulative total of the previous decade.
Building on this momentum, the 2.0 policy, announced on May 18 and effective July 1, addresses lingering pain points identified during implementation.
The “One More, One Less, Two Modernizations” Framework
The 2.0 policy is structured around what officials call the “One More, One Less, Two Modernizations” (一多一少两化) framework, as detailed by MOFCOM Vice Minister Sheng Qiuping at a State Council press conference.
“One More” — More tax-free shops: The policy encourages more qualified retailers to become tax-refund stores, targeting full coverage at major commercial areas, scenic spots, markets, and ports. As of early 2026, China has 14,000 tax-refund stores nationwide, roughly four times the number at the end of 2024.
“One Less” — Less customs inspection time: For refund applications under 10,000 yuan (RMB), customs now applies random sampling inspections. Travelers not selected skip physical inspection entirely, dramatically reducing queue times at airports.
Paperless modernization: Digital processing eliminates the need for paper receipts. When customs or agents enter a passenger’s identity information, the system automatically retrieves invoice data. “So fast! I didn’t even need to take the gifts out of my suitcase, nor find paper receipts. It was done in just a few minutes,” said Indonesian traveler Mr. Hu, who processed his refund at Hangzhou Xiaoshan Airport on the first day of implementation, as reported by People Daily.
Standardized “Buy Now, Refund Now”: The policy introduces cross-regional mutual recognition of the “Buy Now, Refund Now” (即买即退) service, allowing travelers to complete refunds at any departure port across the country. The departure period has been unified and extended to 28 days nationwide, enabling seamless multi-city itineraries.
Smart Technology at the Forefront
At Shanghai Pudong International Airport, new smart verification terminals are transforming the passenger experience. Gu Siyu, a customs officer at Pudong Airport, told People Daily that “smart verification allows customs to complete procedures with a single click, improving departure tax refund verification efficiency by 1.5 times compared to before.” The terminals feature real-time voice transcription and translation, allowing video calls with English translations displayed on screen. A Canadian traveler at Pudong described the device as “so advanced — not only can it do video calls, but I can also see English translations.”
International Consumption Hubs Lead the Way
The five designated international consumption hub cities — Shanghai, Beijing, Guangzhou, Tianjin, and Chongqing — are at the center of this transformation. In 2025, they accounted for one-third of China’s inbound foreign visitors, half of consumer goods imports, and two-thirds of departure tax refund sales, according to MOFCOM data.
Shanghai, with over 2,100 tax-refund stores, saw refund sales grow 80% year-on-year in 2025. Beijing reported 66% growth in refund consumption and aims to double its tax-refund stores by 2027, with over 100 “Buy Now, Refund Now” locations. Shenzhen processed 68,000 refund transactions in 2025 — a 14-fold increase — and has compressed refund processing time to under five minutes through its “one order, one bag, one code” digital model.
Broader Economic Strategy
The tax refund upgrade is one component of a larger Chinese strategy to boost domestic consumption amid economic headwinds. Related measures include expanded visa-free transit access, payment facilitation systems, a 20 billion yuan fund supporting 15 pilot cities in building international consumption environments, and the “Shop in China” (购在中国) brand campaign.
“As China’s door to the outside world opens wider, more and more foreign friends are coming to China, and inbound consumption is ushering in broad space for development,” Sheng Qiuping said at the May press conference, as reported by Xinhua. He noted that intensifying departure tax refund efforts can “provide inbound travelers with more high-quality goods, expand exports, drive high-quality development of domestic retail and tourism, promote employment and income growth, and provide support for boosting consumption.”
What to Watch
While the 2.0 policy addresses key friction points, implementation consistency across provinces — particularly for the cross-regional mutual recognition mechanism — will be critical to its success. Beijing’s target to double tax-refund stores by 2027 signals sustained policy commitment, and the integration of AI-powered verification technology points toward a future of fully automated, frictionless refund processing. If successful, the “Shop in China” brand could reshape global tourism shopping patterns, positioning China as a competitor to established duty-free shopping destinations.