In an effort to promote Hainan as a sunny vacation hotspot for international tourists, the Chinese State Department has decided to reduce departure taxes for foreigners who purchase goods on the island. This so-called “departure tax reduction measure” will mean an 11% reduction to the value-added tax (VAT). The rebate will only apply to international tourists who, within a single day, purchase a minimum amount of reduced tax items at one of the designated stores.
The details and guidelines of the project come from the Ministry of Finance as released in their report this week: “Announcement Regarding the Launching of the Hainan Departure Tax Reduction Measure for Foreign Tourists Pilot Project.” The report stated that at least for the time being only purchases of 800 RMB or more will receive the tax rebate. Also, to be eligible for the reduced tax rate, goods must be purchased by individual international tourists at no more than one of the designated stores, and all within a single day. Additionally, only international tourists and visiting compatriots from Taiwan, Hong Kong and Macau who have been in mainland China for fewer than 183 days can receive the tax rebates. The actual formula for calculating the rebate is as follows: the reduced amount is equal to the original receipt of sale – including the value-added tax – multiplied by the reduced tax rate.
Here are the six conditions that international tourists must meet in order to receive the reduced tax rate:
1) Purchases must be made at designated stores; goods purchased must be specially designated as reduced tax items; the total purchase value must reach the predetermined amount (currently 800 RMB); and reduced departure tax application forms and other certificates must be obtained.
2) The reduced tax items can neither be used nor consumed prior to completing customs procedures at the time of departure.
3) The length of time between the purchase of the reduced tax items and the day of departure must not exceed 90 days.
4) The purchaser must bring the reduced tax items with him or her when leaving the country. (The goods may not be shipped separately.)
5) The purchaser must sign the reduced departure tax application forms when bringing the items through customs.
6) Tax rates may be reduced only at specially designated stores.
The report went on to say that many personal items are eligible to receive the departure tax rebate. However, items including foods, beverages, fruit, cigarettes, alcohol, cars and motorcycles are currently excluded from the rebate offer.
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