Hainan Free Trade Port Major Policies

On June 1st, 2020, the Central Committee of the Communist Party of China and the State Council jointly released a master plan for the Hainan free trade port, which aims to build the southern island province into a globally-influential high-level free trade port by the middle of the century.

According to the master plan, a free trade port system focusing on trade, investment liberalization and facilitation will be “basically established” in Hainan by 2025 and become “more mature” by 2035.

Following is a summary of the major policies for international investors & travelers, though we do not know now when the policies will be carried out:

About Taxes & Duty-Free from Hainan Free Trade Port Master Plan:

  • Personnel income tax up to 15% (Now in China, the highest is 45%)
  • To implement 15% corporate income tax on government encouraged enterprises
  • Import tariff, import value-added tax, and consumption tax shall be exempted for imported production equipment for enterprises’ own use
  • To exempt import tariff, import value-added tax and consumption tax on imported vehicles and yachts for enterprises’ own use.
  • Import tariff, import value-added tax, and consumption tax on imported production raw and auxiliary materials will be exempted.
  • To exempt Import tariff, import value-added tax and consumption tax on imported goods purchased by island residents. (So far, all buyers must leave Hainan Island to get the taxes exemption).
  • Enterprises in tourism, modern service, and high-tech industries shall enjoy corporate income tax-free from a new overseas direct investment before 2025.
  • Enterprise capital expenditure can be deducted or accelerated before tax
  • Duty-free import and sales of overseas exhibits.
  • Goods originating in Hainan or containing more than 30% of the processing value of imported materials and parts will be exempted from import tariffs when entering mainland China.
  • Allow flights in and out of Hainan Island to be filled with bonded aviation oil.
  • Increase the amount of tax-free shopping in outlying islands to 100,000 CNY per person per year (now CNY30,000) and increase varieties, this will attract more Chinese to Hainan Island for shopping.

About Yang Pu Port of China in the west of Hainan Island:

  • Export tax refund shall be given to the domestic construction ships registered in “Yangpu Port of China” (in the west of Hainan Island) and engaged in international transportation,
  • Domestic ships engaged in the same ship transportation of domestic and foreign trade with “Yangpu Port of China” as the transfer port can be filled with bonded oil.
  • To build Yangpu Port of China” as an international port of registry
  • Tax refund at the port of departure for goods transferred and departing through “Yangpu Port of China”

Other Policies on Hainan Free Trade Port System

  • Allow overseas universities of science, technology, agriculture and medicine, and vocational colleges to run independently in Hainan
  • Cross border trade and a new type of international trade bank authenticity review: from pre-review to post a review
  • Negative list of cross-border service trade of Hainan free trade port
  • To implement the market access commitment as soon as possible system
  • Special list for market access of Hainan free trade port
  • Negative list of foreign investment access in Hainan free trade port.
  • Government procurement treats domestic and foreign enterprises equally.
  • Implement a more convenient visa-free entry policy. So far visa waiver for tourists from 59 countries.
  • Negative list management of work permit for foreign personnel
  • Allow overseas personnel to act as legal representatives of legal institutions, institutions, and state-owned enterprises
  • Remove restrictions on overseas financing of ships and aircraft.
  • To build Hainan International Intellectual Property Exchange
  • Support overseas securities fund and futures business institutions to establish wholly-owned or joint venture financial institutions
  • Support the establishment of property insurance, life insurance, reinsurance companies, mutual insurance organizations, and self-insurance companies
  • Support cooperation with overseas institutions to develop cross-border medical insurance products
  • Construction of international energy, shipping, property rights, equity, and other trading places
  • Carry out Internet data interaction pilot
  • Expand the opening of navigation rights including the fifth and seventh navigation rights
  • Construction of cruise tourism pilot area
  • Establishment of yacht industry reform and development innovation pilot area

 

Unofficial translation and summary from Hainan free trade port master plan released on June. 1 by the Central Committee of the Communist Party of China and the State Council.

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