In accordance with the “Notice on the Personal Income Tax Policies for High-End and In-Demand Talents in Hainan Free Trade Port” (Jointly Issued by the Ministry of Finance and the State Taxation Administration, Document No. 32 [2020]) and the “Notice on the Interim Measures for the List Management of High-End and In-Demand Talents Enjoying Personal Income Tax Preferential Policies in Hainan Free Trade Port” (Issued by the Hainan Provincial Government, Document No. 31 [2022], hereinafter referred to as the “Interim Measures for List Management”), the following matters are hereby notified:
1. Income Derived from the Hainan Free Trade Port
Income derived from the Hainan Free Trade Port refers to the comprehensive income obtained by high-end and in-demand talents from the Hainan Free Trade Port. This includes wages and salaries, remuneration for labour services, author’s remuneration, and royalties. It also covers business income and talent subsidies recognized by the Hainan Province, with the corresponding taxes paid within the Hainan Free Trade Port. The specifics are as follows:
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- Wages and Salaries: This includes wages, salaries, bonuses, year-end bonuses, labour dividends, allowances, subsidies, and other income related to employment or hiring obtained by individuals working in the Hainan Free Trade Port.
- Remuneration for Labor Services: This is the income obtained by individuals from providing labour services within the Hainan Free Trade Port.
- Author’s Remuneration: This refers to income received by individuals for their works published or released in forms such as books and periodicals within the Hainan Free Trade Port.
- Royalties: This includes income from providing the usage rights of patents, trademarks, copyrights, non-patented technologies, and other rights within the Hainan Free Trade Port.
- Business Income: This refers to income obtained from production and business activities within the Hainan Free Trade Port.
- Talent Subsidies Recognized by Hainan Province: These are subsidies provided to talents, which are categorized based on the recipients and methods of disbursement. If related to employment, they are included in comprehensive income; if related to production and business activities, they are included in business income.
2. Calculation of Tax Reduction and Exemption Amounts
High-end and in-demand talents can calculate their personal income tax reductions in the Hainan Free Trade Port using the following methods:
(1) Calculation of Tax Reduction for Comprehensive Income of Resident Individuals
Tax reduction amount = (Tax payable on comprehensive income – Comprehensive income taxable amount × 15%) × Comprehensive income from Hainan Free Trade Port ÷ Total comprehensive income
(2) Calculation of Tax Reduction for Business Income of Resident Individuals
Tax reduction amount = (Tax payable on business income – Business income taxable amount × 15%) × Business income taxable amount from Hainan Free Trade Port ÷ Total business income taxable amount
(3) Calculation of Tax Reduction for Relevant Income of Non-Resident Individuals
- Wages and Salaries: Tax reduction amount = (Tax payable on wages and salaries – Taxable amount of wages and salaries × 15%) × Income from wages and salaries in Hainan Free Trade Port ÷ Total income from wages and salaries
- Labor Remuneration, Author’s Remuneration, and Royalties: Tax reduction amount = Tax payable in Hainan Free Trade Port – Taxable amount in Hainan Free Trade Port × 15%
- Business Income: Tax reduction amount = (Tax payable on business income – Business income taxable amount × 15%) × Business income taxable amount from Hainan Free Trade Port ÷ Total business income taxable amount
3. Calculation Method for Accumulating 183 Days of Residence in the Hainan Free Trade Port
High-end and in-demand talents eligible for personal income tax preferential policies in the Hainan Free Trade Port must accumulate at least 183 days of residence within a tax year. This means that within a single tax year (from January 1 to December 31), these individuals must physically stay in the Hainan Free Trade Port for a total of 183 days. The day of entry and the day of departure from the Hainan Free Trade Port each count as one full day. If there are multiple entries and exits within the tax year, the days are combined to reach the total.
4. Confirmation and Feedback Process for the List of High-End and In-Demand Talents
(1) Confirmation Process for Meeting the “183 Days of Residence” Condition
The Talent Development Bureau of the provincial party committee will forward the list of high-level talents, as recognized by the various talent management departments in Hainan Province, to the Provincial Human Resources and Social Security Department by the end of December each year. The Provincial Taxation Bureau, in accordance with the annual income standards defined in the “Interim Measures for List Management,” will provide the list of individuals whose annual reported income meets the criteria to the Provincial Human Resources and Social Security Department by the end of January the following year.
(2) Confirmation Process for Those Unable to Meet the “183 Days of Residence” Condition Due to Professional Characteristics
Certain professionals, such as those in aviation, shipping, and offshore oil and gas exploration industries, registered within the Hainan Free Trade Port may not be able to meet the “183 days of residence” condition due to the nature of their work. Starting from 2024, these individuals can apply through their employing or business units to the Hainan Provincial Electronic Taxation Bureau by March 1 each year, as required by the Provincial Taxation Bureau and the Provincial Human Resources and Social Security Department. The Provincial Taxation Bureau will compile the information of applicants who meet the income and substantive operation requirements and submit it to the Provincial Human Resources and Social Security Department.
(3) Feedback on the List
The Provincial Human Resources and Social Security Department will aggregate the lists mentioned above and forward them to social insurance agencies and relevant departments such as the Development and Reform Department for verification of social security payments, credit, and residence days. For those who meet the “183 days of residence” condition, the Provincial Human Resources and Social Security Department will provide the final list of high-end and in-demand talents eligible for personal income tax preferential policies to the Provincial Taxation Bureau by March 1 the following year. For those who cannot meet the “183 days of residence” condition due to professional characteristics, the Provincial Human Resources and Social Security Department will verify the situation with relevant departments and organize a review. The confirmed list of individuals eligible for the tax benefits will be promptly sent to the Provincial Taxation Bureau. The Provincial Taxation Bureau will notify the eligible individuals of their preferential status through SMS or other appropriate means.
5. Interdepartmental Joint Management and Services
(1) Annual Tax Settlement and Preferential Policy Enjoyment for Eligible High-End and In-Demand Talents
Eligible high-end and in-demand talents must complete their annual tax settlement in the Hainan Free Trade Port to benefit from preferential policies. The settlement period for business income is from January 1 to March 31 of the following year, and for comprehensive income, it is from March 1 to June 30 of the following year. Non-resident individuals unable to enter the country during these periods may authorize tax service agencies, other units, or individuals to handle the process on their behalf. Alternatively, they can apply for eligibility for the personal income tax preferential policy through the Provincial Taxation Bureau to the Provincial Human Resources and Social Security Department at least 30 days before leaving the country. The Provincial Human Resources and Social Security Department must confirm and respond within 10 working days. Once confirmed as high-end and in-demand talents, the tax authorities will process the tax refund according to regulations.
High-end and in-demand talents must retain proof of labor relationships, such as labor contracts or employment agreements of more than one year, with companies or units registered and substantially operating in the Hainan Free Trade Port for at least five years.
(2) Disputes Regarding the 183 Days of Residence
If there are any disputes regarding the 183 days of residence requirement for high-end and in-demand talents in the Hainan Free Trade Port, the Provincial Human Resources and Social Security Department will handle and respond to these disputes.
(3) Strengthened Supervision and Random Checks
The Provincial Human Resources and Social Security Department, the Provincial Social Insurance Service Centre, and the Provincial Taxation Bureau must enhance supervision during and after the process. They will conduct joint random checks on the high-end and in-demand talents enjoying personal income tax preferential policies. The Provincial Human Resources and Social Security Department and the Provincial Market Supervision Administration will lead the resolution of disputes as per their departmental functions, ensuring the successful implementation of the personal income tax preferential policies for high-end and in-demand talents in the Hainan Free Trade Port, in accordance with the “Interim Measures for List Management.”
6. Other Provisions
This notice shall come into effect on January 1, 2023. The “Notice on Implementing the Personal Income Tax Preferential Policies for High-End and In-Demand Talents in Hainan Free Trade Port” (Hainan Fiscal and Taxation [2020] No. 1019), jointly issued by the Hainan Provincial Department of Finance, the State Taxation Administration of Hainan Province, the Hainan Provincial Market Supervision Administration, and the Talent Development Bureau of the CPC Hainan Provincial Committee, shall be abolished upon the completion of the individual income tax settlement for the year 2022.
Any issues or suggestions arising during the implementation process should be promptly reported to the relevant provincial authorities for research and resolution.
Hainan Provincial Department of Finance
State Taxation Administration of Hainan Province
Hainan Provincial Human Resources and Social Security Department
Hainan Provincial Market Supervision Administration
Talent Development Bureau of the CPC Hainan Provincial Committee
December 23, 2022
Related article: Compilation of important policies for Hainan Free Trade Port (February 2024)
