Foreign shoppers in Shanghai are being encouraged to spend more, as the city expands the number of stores offering value-added tax (VAT) refunds at the point of sale, rather than when visitors depart the country.

Last week, China's State Taxation Administration (STA) announced that the 'refund-on-purchase' policy, initially piloted in Shanghai, Beijing, Guangdong, Sichuan, and Zhejiang, has now met all operational requirements for a nationwide rollout to replace the 'refund-on-departure' system.

Shanghai pioneered the "refund-upon-purchase" service back in 2019, making it the first city in China to offer this convenience. The city is also expanding the scheme to cover more stores.

A store selling traditional Chinese clothing in the city processed its first-ever 'refund-upon-purchase' transaction on Monday, selling garments to two Serbian tourists who were pleasantly surprised to receive an 11 percent tax refund immediately.

"It's very convenient. Yes, we can refund at this part. We don't need to wait until later," said one of the Serbian shoppers.
By March of this year, 284 of the city's 587 tax-free stores were offering instant refunds at the point of purchase, with many more expected to join the system in the coming months.

Travelers receiving a VAT refund at the point of sale must still undergo customs verification when departing.
"I bought a watch and I had a 30 percent refund. [It's] 20 percent cheaper," said a Filipino traveler at Shanghai Pudong International Airport after receiving her VAT rebate.

"In the first quarter of 2025, the passenger clearance office at Shanghai Pudong International Airport processed 20,596 tax refunds, totaling 63.23 million yuan (about 8.6 million U.S. dollars), marking increases of 155 percent and 90.62 percent, respectively," said Huang Yanyiqi, deputy head of the seventh passenger clearance section at the airport.