• Setting up December 1, 2020, particular uncooked and auxiliary materials imported by unbiased authorized entities registered in Hainan for the entities’ own output or for processing trade or services trade activities “with both of those ends abroad” (importing elements for exporting the ultimate merchandise/support) can be exempt from import responsibilities, import worth-extra tax, and import intake tax.
  • The zero-tariff uncooked and auxiliary elements are issue to constructive list management. The good record handles agricultural items, source goods, substances, optical fiber preforms, and components for the maintenance of aircrafts and ships.
  • The constructive checklist for zero-tariff uncooked and auxiliary supplies is a person of the 4 lists (1 detrimental and a few favourable) underneath Hainan No cost Trade Port’s “zero tariff” insurance policies. With the publication and implementation of the to start with checklist, the other three are predicted to be produced in the close to long term.
  • In addition, Hainan authorities on November 27 authorized condition-owned enterprises (SOEs) in Hainan FTP to listing securities on foreign stock exchanges.

On November 12, 2020, 3 Chinese authorities – the Ministry of Finance (MOF), the Basic Administration of Customs (GAC), and the Point out Taxation Administration (STA) – introduced the Discover on “Zero Tariff” Insurance policies for Importing Uncooked and Auxiliary Supplies to Hainan Free Trade Port (Cai Guan Shui [2020] No.42).

According to the notice, uncooked and auxiliary components on the beneficial checklist imported to Hainan Cost-free Trade Port (FTP) can be exempt from import duties, import value-extra tax (VAT), and import consumption tax (CT), if:

  • The applicant is an independent authorized entity registered in Hainan FTP and
  • The raw and auxiliary elements are imported for:
  • Creation for self-use
  • Output and processing things to do “with equally finishes abroad” – the closing items will be exported to overseas marketplaces or
  • Company trade functions with both of those finishes abroad.

This “zero tariff” plan arrived into drive December 1, 2020 and will be powerful till 2025 when island-extensive impartial customs operations are carried out.

What is in the optimistic listing of zero-tariff raw and auxiliary supplies?

The zero-tariff raw and auxiliary components are subject to constructive record management, which suggests that only elements included by the optimistic list can be exempt from import taxes (you might obtain the English version of the full checklist here – but what need to be famous is that the list will be dynamically altered by related departments, according to the useful desire and regulatory ailments of Hainan).

The whole positive listing has a whole of 169 items, all with unique 8-digit HS codes, covering agricultural items (like coconut and barley), resource products and solutions (like ore, coal, crude oil, liquefied organic fuel, and wooden), chemical raw products (like xylene, methanol), optical fiber preforms, and aircraft and ship maintenance spare areas. Between them, the spare areas for plane and ship routine maintenance need to fulfill the appropriate ailments prior to tax exemption can be applied.

Organization possibilities and criteria below the zero tariff plan

The zero tariff coverage for imported raw and auxiliary products is conducive to conserving operating expenses and money fees of manufacturing and processing enterprises, and will advantage the development of sectors like aviation, aircraft maintenance, ship upkeep, and processing and assembly.

On December 1, Hainan Airlines Keeping Co., Ltd. imported a batch of meteorological radar transceivers value of RMB 3.8 million (US$580,000) and is envisioned to come to be the very first company to appreciate the zero tariff plan. In accordance to reporting by Xinhua, the imported meteorological radar transceivers, after customs clearance, could take pleasure in a tax exemption of RMB 530,200 (US$80,687).

To delight in this tax exemption plan, on the other hand, entities should really note that there are also restrictive ailments.

The See stipulates that the imported zero-tariff raw and auxiliary materials are only for generation or use by a Hainan-registered entity, are subject matter to customs supervision, and can not be transferred in just or out of the island. If the entity wished to transfer the zero-tariff products or the products manufactured with zero-tariff materials to other entities in just the island, or promote them to the Chinese mainland, it has to shell out taxes and go by way of vital customs formalities.

Hence, before importing resources, it is a good idea that entities fully grasp effectively how they are going to use the products and where the ultimate products will be bought to.

Background – zero tariff policies on specified imported goods

On June 1, 2020, China produced the In general Plan for the Building of Hainan FTP, which unveiled the roadmap for Hainan to be created into a planet-major no cost trade port and established out a sequence of preferential procedures, which include the zero tariff procedures on particular imported merchandise.

In accordance to the Plan, China aims to launch island-wide impartial customs operations and put into action a simplified tax routine in Hainan by all-around 2025. Just after that time, all imported goods – other than for products detailed in the to-be-formulated Unfavorable List of Commodities Subject matter to Import Taxes and merchandise prohibited from importing into Hainan by regulation – will be exempt from import duties.

In advance of the island-vast customs closure and functions, some imported items subject to record administration can be exempt from import duties, import VAT, and import CT. These goods consist of generation products imported by enterprises for self-use (damaging list), raw and auxiliary resources imported to Hainan below particular problems (good record), ship, aircrafts, other usually means of transportation, and yachts imported to the island for transportation and tourism (favourable listing), and imported products consumed by citizens of Hainan (positive checklist).

All the lists will be dynamically modified by appropriate departments, according to sensible need and regulatory conditions of Hainan. And, with the first good list for raw and auxiliary elements becoming released and implements, we can assume that the remaining lists will be unveiled in the near future.

Hainan will allow countrywide corporations to record shares abroad

On November 27, 2020, the Condition Administration of Overseas Exchange (Safe)’s Hainan bureau issued the Administrative Measures for Pilot Registration of Overseas Listing of Organizations in the Hainan FTP, allowing for point out-owned enterprises (SOEs) in Hainan FTP to publicly challenge and trade securities at a foreign stock marketplace following seeking approval from China Securities Regulatory Commission (CSRC).

The Actions took result as of the date of promulgation. SOEs registered in Hainan can make, change, or cancel registrations of overseas share listings at banking companies under the jurisdiction of Hainan bureau of the Protected. The coverage is China’s hottest shift to actively contain Hainan in global trade and business, and to catch the attention of international money.

Dezan Shira & Associates has been shelling out near attention to the progress of Hainan FTP and its preferential procedures on trade facilitation, import and export obligations, customs supervision, and economical reforms. For a lot more information and facts, be sure to get in touch with us for aid at [email protected]


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China Briefing is penned and manufactured by Dezan Shira & Associates. The observe helps foreign buyers into China and has carried out so given that 1992 through places of work in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Make sure you contact the firm for guidance in China at [email protected] 

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