Shanghai plans tax refund and duty-free shopping program

Shanghai is planning to carry out a pilot tax refund and duty-free shopping plan for foreign shoppers. Officials hope to build Shanghai into a famous international tourism city, according to the Shanghai municipal tourism administration. Reports are circulating that suggests the Disneyland theme park which is being built in Shanghai might have tax refund services and duty-free shopping zones.

Normally, duty-free means the imported good's custom, added-value tax and sales tax are waived. There is only one duty-free shop in Shanghai, which is run by the China National Service Corporation for Chinese Personnel Working Abroad. Its target customers and products are very limited. Experts predict that setting up just a few duty-free shops could facilitate a boom in Shanghai retail trade.

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Compared to the duty-free plan, the other service – tax refund, which refunds tourists of the added-value tax upon leaving the country – has gained more popularity. A large number of tourists visit Shanghai every year. Data from the Shanghai municipal tourism administration shows that Shanghai has received more than?5.9 million foreign tourists in 2010. As the tax refund policy applies to more types of goods than the duty-free policy does, once Shanghai's tax refund policy is approved, many people expect a sharp increase in consumption by foreign tourists.

Experts also said that providing a tax refund to foreign tourists is a major trend in tourism development. Unlike European and American countries, China still lacks local luxury brands, which means Shanghai needs to promote tax-refundable goods.