Shanghai to Become China’s Second Duty-Free Shopping District
Jan. 22 – Following Hainan Province, Shanghai is set to be the second location in Mainland China to allow duty-free shopping for foreign tourists traveling to the region.
The recent guidelines, which set a clearer path for Shanghai to become an international trade center, were approved by the Standing Committee of the People’s Congress of Shanghai Municipality on December 26, 2012. The guidelines provide that Shanghai will explore the departure tax-free shopping policy in coordination with national-level administrations and select locations to set up duty-free shops.
The departure tax-free policy, first piloted in Hainan Province two years ago, allows foreign visitors to claim tax refunds if they purchase more than a designated amount of certain items.
China Duty Free Group Co. Ltd., the state-owned enterprise specializing in nationwide duty-free business, will open the first duty-free store in the city. It has been suggested that the duty-free store should be located in Chuansha, Pudong District, as a supporting facility for Shanghai Disneyland, which is expected to be opened to the public in 2014.
“Introducing a departure tax-free policy in Shanghai will develop a sound shopping atmosphere that is of vital importance in turning the city into an international trade center,” said Shanghai Vice Mayor Zhao Wen.
However, according to some experts, exploring a departure tax-free policy in the city is far from enough, as the proposed policy only extends to foreign visitors, while the region’s true consumption power lies with domestic consumers.
According to Xu Peixing, Director of the Shanghai Economic Council, the final location of the duty-free store will be decided by the national-level departments, and specific restrictions regarding the departure tax-free policy will be established at a later date.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia.
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