Three Authorities Release Tax Policies on Island-wide Independent Customs Operations for Goods in Hainan Free Trade Port

Recently, the Ministry of Finance (MOF) and two other authorities have jointly issued the Circular on Tax Policies for the Entry and Exit of Goods via the "Front Line" and "Second Line" and for Their Circulation within the Island of Hainan Free Trade Port and the Circular on the Catalog of Goods Subject to Import Duties in Hainan Free Trade Port (collectively the "Circulars"), both of which will take effect from the commencement of the island-wide independent customs operations of the Hainan Free Trade Port (FTP).

The Circulars stipulate that the "front line" will be established between the Hainan FTP and other countries or regions outside the customs territory of the People's Republic of China, and the "second line" will be established between the Hainan FTP and other regions within China's customs territory. First, legal entities independently registered in the Hainan FTP, eligible public institutions, and private non-enterprise entities within the FTP (collectively "eligible entities") will be exempt from import taxes (including import duties, import value-added tax, and consumption tax) on goods imported via the "front line" that are not included in the Catalog of Goods Subject to Import Duties ("zero-tariff" goods). Second, "zero-tariff" goods and their processed products will be exempt from additional import taxes when circulated among eligible entities within the island. Third, import taxes must be paid on "zero-tariff" goods and their processed products if they enter mainland China via the "second line" or are circulated to non-eligible entities and individuals. Additionally, for goods processed by enterprises in encouraged industries within the Hainan FTP with a value added of 30% or more, import duties will be exempted when these goods enter mainland China via the "second line."



(Source: http://gss.mof.gov.cn/gzdt/zhengcefabu/202507/t20250722_3968309.htm

http://gss.mof.gov.cn/gzdt/zhengcefabu/202507/t20250722_3968312.htm)

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