Page 10 - The South China Business Journal

designed speci昀椀cally for the FTP. This platform will Why does it matter to FIEs？
serve as a centralized hub for handling port and
international trade-related business, simplifying For foreign-invested enterprises (FIEs), the rollout
processes and enhancing operational ef昀椀ciency. of Hainan’s zero-tariff and customs closure policies
on December 18, 2025, presents a signi昀椀cant new
Customs procedures for zero-tariff goods opportunity to streamline operations and reduce
costs when engaging with the Chinese market.
Goods imported through the Hainan FTPs open The new framework allows FIEs to import raw
ports, including bonded and zero-tariff goods, will materials and components into the Hainan Free
generally be released directly by customs unless Trade Port without paying tariffs, and—if their
they require inspection, quarantine, or licensing processing activities in Hainan generate at least
as mandated by law, with speci昀椀c regulations on 30 percent added value—export the resulting
direct release to be developed separately. goods to the Chinese mainland tariff-free. This The stuff that keeps
creates an attractive channel for companies
Zero-tariff goods are also exempt from speci昀椀c seeking to maintain access to China’s vast
customs regulations related to duty exemptions consumer market while optimizing supply chain
and tax reductions, with detailed management ef昀椀ciency and cost structures.
rules to be formulated separately. you up at night.
In addition, FIEs registered in Hainan and operating
For zero-tariff goods and their processed in encouraged sectors will be able to import
products moving from Hainan FTP to the certain goods from overseas—such as equipment,
Mainland, eligible entities must complete technology, or production inputs—completely free
customs procedures, and customs will collect of import tariffs, VAT, and consumption tax. This The advice that
import duties, VAT, and consumption tax substantially lowers the cost of capital investment
accordingly. If the relevant import taxes have and daily operations for foreign companies
already been paid or supplemented either during establishing or expanding a presence in Hainan.
import or circulation within the island, customs
will not charge those taxes again upon entry to The simpli昀椀ed customs procedures and digitalized
the mainland. Similarly, domestic VAT already trade infrastructure—including the new smart lets you sleep
paid within the island will not be collected again. customs system and International Trade Single
Goods produced by encouraged industrial Window—are designed to reduce administrative
enterprises in the Hainan FTP containing imported burdens and improve clearance times. For foreign
materials and having 30 percent or more enterprises unfamiliar with China’s often complex
processing value added that are subject to zero- customs environment, this presents a more
tariff treatment are exempt from import duties predictable and transparent process for moving
when entering the Mainland. However, import VAT goods in and out of the FTP.
and consumption tax still apply, with detailed tax
management rules to be separately issued. Once Strategically, Hainan’s customs closure model
goods entering the Mainland have paid all required allows for differentiated trade policies between
import taxes and submitted necessary licenses the Free Trade Port and the Chinese mainland, as Everyone has a private life. For every part
and documents, they will be managed under well as between Hainan and overseas markets. of that there’s Mishcon de Reya Hong Kong.
domestic circulation rules and will no longer be This gives FIEs greater 昀氀exibility in managing
subject to customs supervision. cross-border trade 昀氀ows while bene昀椀ting from
preferential policies at both ends. As geopolitical From Tax and Immigration to Wealth
tensions and supply chain realignments continue
to in昀氀uence global investment decisions, Hainan’s Structuring and Disputes, whether domestic
enhanced policy framework positions it as a or cross border, we’re here.
valuable location for foreign companies to
establish regional headquarters, manufacturing mishcon.com/mishcon-hong-kong
bases, or logistics hubs that serve both China and
the broader Asia-Paci昀椀c region.

In short, the upcoming policy shift provides foreign-
invested enterprises with a compelling incentive
to reevaluate their China strategy and consider
Hainan not just as a pilot zone, but as a long-term
platform for growth and regional integration.

Tax | Family | Immigration
Wealth Structuring | Disputes

7 AMCHAM SOUTH CHINA