Alipay to start tax refund program

Will help local tourists to European nations; seen as boosting Alibaba IPO

Chinese nationals who visit and purchase products in certain European countries will be able to receive tax refunds on Alibaba Group's payment website and smartphone app starting from mid-July, the company confirmed on Sunday.

A company spokesperson told the Global Times that Chinese tourists who have bought goods such as luxury products and electronics in certain European countries could soon be able to bond their tax refund applications with their Alipay accounts, and then get the refund in Alipay instead of at airports or stores overseas.

The staff member declined to specify which European countries would participate in this program, but China National Radio (CNR) reported on Saturday that France, Germany, Italy and the United Kingdom will allow Chinese visitors to receive their tax refunds via Alipay accounts.

The Alibaba staff member noted that details will be released soon.

The typical procedures to file for and receive tax returns after buying things overseas are a little complicated.

Tourists first have to request a tax refund application from the store where purchases are made and then select a method to receive the refund, such as in cash, by credit card or check. Tourists must then line up at customs in the airport from where they will depart the country to apply for a refund with the form, their passport and a plane ticket.

They will then need to wait for as long as three months to get the refund on credit card, or join another line after the security check at the airport to receive the refund in cash.

Chinese visitors to Europe did not collect 1 billion yuan ($161.02 million) in tax refunds in 2013, the Xinhua News Agency reported on Friday.

If a tourist chooses to receive the refund on Alipay, he needs to fill out an application form with the cell phone number linked to his Alipay account, Xinhua said.

Then the tourist will get a stamp on the form from customs at the airport where he will depart the country, and drop off the document at a mail box. Within as little as seven days, the tourist can then receive his tax refund on Alipay, CNR said.

A Beijing resident surnamed Hu told the Global Times on Sunday that she waited for an hour at London's Heathrow Airport to get the tax refund.

"It was not a complex procedure but was really time-consuming," said Hu, who bought an iPhone and several designer handbags during a one-month trip in Europe. "I would like to try Alipay next time, as long as it does not charge a high service fee."

Alipay has formed an alliance with Swiss tax-refund company Global Blue to allow more than 5,000 retailers to provide the service, news portal qq.com reported on Friday. The company launched a similar service for Chinese tourists to South Korea in October 2013.

Alibaba, which operates China's largest online shopping mall taobao.com, is preparing for an IPO on the New York Stock Exchange.

The debut could surpass Facebook Inc's $16 billion listing to become the biggest tech IPO in history.

The e-commerce titan, which is valued as high as $250 billion, has been increasing its presence in the US and Europe.

On June 11, the company launched its first online shop targeting US buyers, 11main.com, which sells products ranging from jewelry to toys.

Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting, told the Global Times on Sunday that the new service will boost Alibaba's IPO performance.

"The company has been branching out into many industries other than retail, such as entertainment and medical care," Lu said. "Now Alibaba is connected with the customs departments of several nations in Europe, which will bring it more active users and higher recognition abroad."

However, Alibaba should keep its focus on China's domestic market, since many barriers, such as language and legal systems, will make its expansion abroad highly challenging.

"Alibaba should continue to improve its service in China, and make efforts to reach overseas customers later," he said.