Beijing announced last week that it will lower the tax rebate threshold for foreign tourists and make the rebates easier to claim. Goods that have become too expensive to export because of tariff hikes may cross the border more often in departing visitors’ luggage.
Visitors who spend at least 200 CNY ($27) can now pocket a tax refund at the point of sale. It’s a clever move on paper. If the US is determined to make imported Chinese goods more expensive, why not make it easier for overseas consumers to shop directly in China?
But the policy presents administrative challenges. If you open the door wide enough for visitors to get easy tax refunds, fraudsters could stroll through, too. Locals can pose as tourists to enjoy the tax benefit, retailers can issue fake receipts, and professional buyers can stratify purchases to maximize claims.
European value-added tax refund programs have similarly struggled for decades to close loopholes for professional refund hackers and black-market shopping. China’s system might not fare any better—especially when the policy changes are clearly reactionary.
If organized fraud flourishes under Beijing’s new rules, the ripple effects will reach US shores. Tax fraudsters often look for stackable schemes, and fraudulent rebate claims could finance gray-market goods being shipped to Western markets. This would undermine legitimate US retailers that are already battered by supply chain disruptions and tariff costs.
Fraudulent rebate claims could artificially inflate China’s official consumption metrics, skewing economic forecasts. The mirage of higher consumer tourism could obscure the economic harms of an escalating trade war—at least temporarily. By turning a tourist perk into a tax loophole, China risks its own fiscal health and potentially exports instability to anyone still playing by the rules.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts analyzed the Trump administration’s move to end Harvard University’s tax-exempt status, crypto tax reporting obligations, and more.
The Exchange—It’s where great ideas on tax and accounting intersect.
Insights
Ending Harvard’s Tax-Exempt Status Is Legally and Morally Sound
Anat Alon-Beck and Mark Goldfeder say the Trump administration’s move to revoke Harvard University’s tax-exempt status is supported by related Supreme Court decisions and IRS Revenue Rulings.
Pillar Two Unites Tax Cooperation With Economic Self-Interest
SBC’s Praneeth Narahari says countries under Pillar Two are ending the tax race to the bottom—and that transfer pricing will be crucial in a new era of profit attribution, allocation, and alignment.
IRS-Imposed DeFi Tax-Reporting Obligations May Be Dead for Good
Gibson Dunn attorneys say the disapproval of a rule that would have imposed more tax-reporting requirements on all DeFi participants helps preserve decentralization and privacy by making it harder to make similar rules in the future.
New UK Trust Rules Can Protect Wealth for International Families
Mercer & Hole’s Liz Cuthbertson explains how UK trust rules can provide more opportunities for tax planning to protect family assets.
What Tax Advisers Should Tell US Clients Moving to Latin America
Tax attorneys Virginia La Torre Jeker and Sofia Larrea say that advisers with clients living or marrying in countries such as Ecuador and Costa Rica should work with local tax professionals to advise on tax obligations.
Tax Audit Ruling Against Italy Shows Need for Procedural Fairness
Bird & Bird’s Giuliana Polacco considers the impact of a recent court decision that Italy’s tax authority violated the European Convention on Human Rights in an inspection of taxpayers’ business premises.
New York Law Undercut by Planned US Corporate Disclosure Limits
Bryan Cave Leighton Paisner attorneys explain how proposed changes to the Corporate Transparency Act would affect the New York Limited Liability Company Transparency Act.
Florida Needs to Balance the Scales If It Wants to Cut Taxes
Florida Policy Institute’s Esteban Leonardo Santis says a series of proposed tax cuts in the Sunshine State would be inequitable and offer no options to raise funds.
Billion-Dollar State Tax Subsidies Call for Better Sunshine Laws
Lisa De Simone of the McCombs School of Business says state and local sunshine laws must be refined to promote public disclosure and supported by enforcement of other transparency measures.
How to Build a Personal Brand and Stay on the Company’s Good Side
Starbucks’ Brittany Johnson says in-house counsel often see building a personal brand as risky, but when done intentionally, it can showcase your skills—both within and outside of your company.
Here’s Why Lawyers Struggle on Camera (And How They Can Fix It)
On-camera coach Kerry Barrett says lawyers can learn how to appear natural on camera by practicing vocal mapping, using natural movements, and making eye contact.
Columnist Corner
The Atlanta Braves will be unfairly hit by a federal tax code change capping top earner salary deductions for public corporations starting in 2027, Andrew Leahey says in his latest Technically Speaking column.
The new rule is “a case study in how well-intentioned tax reforms can end up punishing transparency,” Andrew argues, adding that Congress instead should consider an entertainment carveout that encourages public ownership in professional sports. Read More
News Roundup
Bush-Era Lawyer Picked by Trump to Serve as Top IRS Attorney
President
Hundreds at IRS Appeals Office to Take Deferred Resignations
The IRS Office of Appeals is expecting to lose hundreds of staffers to deferred resignations this year, an IRS official said, the latest in an exodus spurred by the Trump administration.
NFL, MLB Lobby to Safeguard Billionaire Team Owner Tax Breaks
Professional sports leagues are taking no chances after President Donald Trump threatened to take away lucrative tax breaks for billionaire owners.
Got Montana Plates? States Ramp Up the Scrutiny on Tax Dodgers
A decades-old tax avoidance strategy could be costing other states hundreds of millions of dollars in vehicle taxes and fees, revenue officials say. Utah and California are leading enforcement efforts to make the tax dodgers pay.
Tax Management Memorandum
Businesses Are Facing Financial Headwinds—A Practical Guide
Businesses facing difficult financial circumstances should prioritize paying trust fund taxes, filing their tax returns, hiring a bookkeeper, among other things, says a Scarinci Hollenbeck practitioner.
S Corp Files—The Case To Find A Post-Death Inside Basis Step Up
A Greenberg Glusker practitioner discusses what inside basis adjustments may be available when an S corporation’s owner dies holding real estate through a partnership investment.
Career Moves
Scott Levine joined Baker McKenzie as a tax partner in Washington.
Melissa Rocha joined KPMG as a partner in its national office.
Andrew Callaghan joined Morgan Lewis as a partner in its tax practice in London.
Jared Whalen joined Sheppard, Mullin, Richter & Hampton as a partner in its tax, employee benefits, and trusts and estates practice group in Houston.
Sydney Carey and Karyn Smith joined Avalara as Chief Financial Officer and Chief Legal Officer, respectively.
James Reardon joined Nelson Mullins Riley & Scarborough as a partner in its litigation practice in Houston.
If you’re changing jobs or being promoted, send your submission to TaxMoves@bloombergindustry.com for consideration.
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