[Global IDT Insights] China Issues Notice on Tax and Customs Measures for Duty-Free Shops

Editorial Team – [2025] 181 taxmann.com 477 (Article)

Global IDT Insights provides a weekly snippet of tax news specifically related to Indirect Taxes from around the globe.

1. China Issues Notice on Tax and Customs Measures for Duty-Free Shops

China has released a policy document outlining revisions to duty-free shop policies covering domestic goods tax refund and exemption procedures, product category expansions, approval authority adjustments, operational requirements, and supervision measures applicable to duty-free retail business.

The policy sets out detailed provisions applicable to port duty-free shops, downtown duty-free shops, and duty-free warehouses. It further clarifies that, to the extent of any inconsistency, this policy document shall prevail over earlier policy documents.

Key aspects of this policy document include:

(a) Revised domestic goods tax refund and exemption mechanism – Domestic goods procured by qualified duty-free operators and approved foreign-invested enterprises for sale in port departure and downtown duty-free shops will be treated as exports. Value-added tax (VAT) and consumption tax on these goods will be refunded or exempted. Goods purchased at tax-inclusive prices and stored in duty-free warehouses will be supervised by customs as duty-free goods, and export declaration procedures may be applied after sale.

(b) Updated tax refund application process – Enterprises must apply for export tax refunds by submitting export customs declarations, VAT invoices, and tax payment receipts to the tax authorities responsible for export tax refunds. The export tax refund rate will follow the nationally unified export tax refund rate.

(c) Revised customs clearance requirements for domestic goods – Domestic goods sold in port and downtown duty-free shops will be treated as domestic goods. When carried out of the country, these goods will be supervised as personal items and will not require export inspection or quarantine. Customs declarations for these goods do not need to include the ‘inspection and quarantine electronic ledger data number’.

(d) Expanded product categories for duty-free shops – Mobile phones, micro drones, sporting goods, health foods, over-the-counter drugs, and pet food are now included in the categories of domestic goods eligible for VAT and consumption tax refund or exemption in port departure, port arrival, and downtown duty-free shops.

(e) Implementation and supervision responsibilities – The Ministry of Finance will coordinate implementation with relevant departments. Customs will oversee customs clearance and supervision of duty-free goods, and the State Taxation Administration will ensure tax refund processing. Provincial governments are responsible for supervising duty-free shops within their regions and organising relevant work.

Source – Official Source

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