The Ministry of Finance (MOF) said Friday that holders of China-based UnionPay credit cards will be allowed to file for valued-added tax refunds in select department stores in Taipei and Kaohsiung, starting from July 2017. The move to allow UnionPay credit card holders to get VAT refunds in the two cities is expected to encourage Chinese tourists visiting Taiwan to spend more here after getting cash back, the MOF said.
Currently, only holders of Visa, Master and JCB credit cards are eligible to file for VAT refunds in the Taipei 101 shopping center, the Zhongxiao branch of the Pacific SOGO Department Store chain, the A8 branch of the Shin-Kong Mitsukoshi Department Store chain in Taipei, and Hanshin Department Store in Kaohsiung.
But amid criticism that excluding UnionPay card holders from the service wasn’t fair to Chinese visitors, the MOF said it had decided to change its policy to encourage Chinese tourists to spend more here and boost Taiwan’s tourism income. UnionPay, a financial services corporation headquartered in Shanghai, is the largest credit card issuer in China. At present, its card holders can only file for VAT refunds on their way out of the country.
The decision to lift the ban on VAT refunds for UnionPay card holders in the four department stores followed moves by several other countries to allow UnionPay card holders to get sales tax refunds in their downtown areas. Such services are now available in the United Kingdom, France, South Korea, Italy and Denmark, according to the MOF.
When UnionPay credit card holders get VAT refunds in cash in the four department stores, they will be asked to give a credit card guarantee for the same amount, the MOF said. If Taiwan’s Customs Administration confirms that the UnionPay card holders have taken the tax-free goods with them when they left Taiwan, the credit card guarantees for the refunds will be canceled, the MOF said.
Taiwan has been making an effort to streamline the VAT refund mechanism to improve the local tourism environment. In addition to the VAT refunds in downtown areas in Taipei and Kaohsiung, it has introduced electronic machines designed to issue VAT refunds to foreign visitors at 10 airports and eight seaports in the country.