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December 29, 2010

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Shanghai mulls tax-free shopping

SHANGHAI will apply to become a tax-free city for overseas tourists if a pilot project in Hainan Province is successful, a Shanghai Commission of Commerce official said yesterday.

There were no plans, however, to adopt a tax-free policy temporarily, tourism authorities said.

"As a metropolis, Shanghai is eminently suitable to offer a tax-free service," said Xu Wenjie, director of the commerce commission's trade and commerce department. "If Hainan Province is successful, I think Shanghai is completely able to follow suit."

However, the city has not yet submitted any proposals to the Ministry of Commerce for the rebate scheme, Xu said.

From January 1, foreign travelers and tourists from Hong Kong, Macau and Taiwan will be able to shop tax-free in the southern Chinese island. The central government initiative is aimed at building Hainan into an international tourist destination by 2020.

Overseas tourists will be able to get a rebate of 11 percent on goods bought in designated shops when they leave the country.

The rebate plan for overseas travelers is considered a prelude to a broader one that will eventually allow tax refunds for the millions of domestic tourists who visit Hainan every year.

In Shanghai, political advisers and tourism insiders have been calling for a tax-free trial for some time.

Last year, advisers with the Jiu San Society, one of the country's democratic parties, said the Pudong New Area would be an appropriate place to trial a tax-free tourist shopping policy, which could stimulate the city's tourism development.

City travel agencies said Shanghai was the biggest shopping destination on the Chinese mainland and a tax-free policy would appeal to tourists and encourage them to spend more in the city.

"A tax-free policy in the city is likely to have more effect than the one in Hainan," said Zhang Wu'an, of the Spring International Travel Service Co Ltd.

The Shanghai Tourism Administration, however, said that Pudong tested a tax-free policy for inbound tourists five years ago, but the state government later rejected a proposal that it be made permanent.


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