Page 6 - The South China Business Journal

D EPTH
Hainan
“
Hainan Free Trade Port
(FTP) will roll out zero-
tariff and customs closure
Hainan to Launch Independent policies on December 18,
2025, creating a more
Customs Operations Dec 18: efficient and open trade
environment. These
changes are expected
Why It Matters to accelerate the port’s
development into a global
trade hub.
By Arendse Huld, China Briefing
”
3 AMCHAM SOUTH CHINA
he Hainan Free Trade Port (FTP) has introduced a
Tcomprehensive set of measures designed to establish a
highly open, ef昀椀cient, and innovative customs environment to
support the accelerated development of the port. These new
“customs closure” policies are scheduled to take effect on
December 18, 2025, marking a signi昀椀cant milestone in Hainan’s
transformation into a globally competitive free trade hub.
Central to these policies are two zero-tariff initiatives: the
昀椀rst grants zero-tariff treatment for exports to the Chinese
mainland of goods processed in Hainan that contain imported
materials and achieve 30 percent or more added value;
the second offers zero-tariff treatment for eligible entities
importing certain goods from overseas into the Hainan Free
Trade Port.
The reforms are part of a broader strategic plan initiated
昀椀ve years ago by President Xi Jinping, aimed at building
a distinctive Chinese free trade port with cutting-edge
policies that facilitate smoother 昀氀ows of people, goods,
capital, and data. The “customs closure” or “whole-island
customs supervision” model will turn Hainan into a special
customs zone with liberalized trade policies between the port
and the outside world, while maintaining precise customs
management between Hainan and the Chinese mainland.
These measures promise to greatly enhance trade ef昀椀ciency
and market access, providing a solid foundation for Hainan to
become an important gateway for China’s high-level opening
to the world.
Zero tariff for value-added goods exported
to the Mainland
Among the policy measures released in recent weeks are
the Interim Measures of the Customs of the People’s
of Taxes on Tariff-Exempt Goods Subject to Value-Added
Republic of China on the Collection and Administration
Processing in the Hainan Free Trade Port (herinafter,
the “Interim Measures”). Released on July 23, the measures
exempt goods produced by encouraged industrial enterprises
achieve an added value of 30 percent or more through
processing within the FTP from import tariffs when entering
in the Hainan FTP that contain imported materials and
the Chinese mainland.
“Encouraged industrial enterprises” refers to companies
operating within industries included in the Catalogue
of Industries Encouraged to Develop in Hainan Free
Trade Port (2024 Edition), which lists 176 sectors across 14
categories, including agriculture, manufacturing, construction,
tourism, and wholesale and retail.
Import value-added tax (VAT) and consumption tax will continue
to be levied in accordance with applicable regulations.
To meet the criteria of “processing added value reaching or
exceeding 30 percent”, the added value resulting from the
manufacturing and processing of goods containing imported
materials within the Hainan FTP by an eligible enterprise
reaches or exceeds 30 percent of the combined value of the
imported and domestically procured materials.
SOUTH CHINA BUSINESS JOURNAL 4