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I have to tell y’all that I consider myself to be pretty well-traveled. And I’m no slouch when it comes to brains, either. And yet, I have never, ever managed to get a VAT refund.

My History With VAT Refunds

At the beginning of my travels as an adult, it was simply because I didn’t understand the process. There was no internet like there is now and although I thought I did everything the right way, I never did get my VAT money refunded. I’ll blame user error on that one and assume I didn’t do something as right as I thought.

Fast forward a decade or so, the internet was a thing, and although I tried to get VAT refunds, it still never worked for me. After 2 or 3 more tries, I finally gave up on the whole process.

What is VAT?

VAT stands for value-added tax. We don’t have VAT here in the U.S., but more than 170 countries do. VAT is similar to a traditional sales tax, in that the consumer pays it at the point of purchase. It’s typically a percentage of the price of the product, and each country determines what their VAT will be.

PC: Wikipedia // public domain

Visitors to countries with VAT still have to pay the tax, but they can qualify for a refund on certain items. It’s a fairly complicated process and it’s easy to miss a step, be told incorrect information or just have your request rejected for no discernible reason. (*cough* Yup *cough*)

The rules for VAT are that the items:

• must be new and unused or unworn
• must be over a certain amount (again, that will vary from country to country)
• must be sold in a store that participates in a VAT refund program
• cannot be any of the goods or services that aren’t eligible for refunds

How to get a VAT refund

There’s a whole process that I won’t get into, but Rick Steves, the guru of travel, explains it well enough. Bottom line is, it’s usually a pain in the behind and since I was never successful in getting my discount, which is why I don’t even bother trying anymore.

Finally! China is offering an easier option

That being said, the State Taxation Administration (STA)  of China has announced they’re updating the country’s VAT refund policy for foreign tourists. With the new policy, instead of requesting a refund upon or following departure, tourists will be able to instantly claim their VAT at tax-free retail stores.

“Foreign tourists can now receive their refund at the time of purchase,” the STA explained, “after completing a credit card pre-authorization.” Customs will then verify the traveler’s identity and goods upon departure, at which point the pre-authorization is released and the transaction officially concluded.

Besides taking out the headache of trying to get back their VAT money, this new system will also allow the possibility of visitors having that refunded money in hand, which, in turn, they might just spend on more shopping and other touristy spending opportunities.

The policy shift was first piloted in Shanghai, Beijing, Guangdong, Sichuan and Zhejiang. Authorities say the policy is now ready for a nationwide rollout.

China Is the First

China is the first country to allow an ‘instant’ refund of VAT money, as far as we can tell. However, it makes so much sense that I hope other countries follow through and start their own version of the program.

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