Circular on the "Zero-tariff" Policy for Raw and Auxiliary Materials in the Hainan Free Trade Port

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Circular on the "Zero-tariff" Policy for Raw and Auxiliary Materials in the Hainan Free Trade Port Cai Guan Shui [2020] No. 42
Circular on the Zero-tariff Policy for Raw and Auxiliary Materials in the Hainan Free Trade Port.png
The Department of Finance of Hainan Province, the Haikou Customs District, and the Hainan Provincial Tax Service of State Taxation Administration, In order to implement the Overall Plan for the Construction of Hainan Free Trade Port, with the approval of the State Council, the "zero-tariff" policy for raw and auxiliary materials of Hainan Free Trade Port is hereby notified as follows:

I. Before the independent customs operations throughout Hainan Island, raw and auxiliary materials imported by enterprises registered in Hainan Free Trade Port as independent legal entities to be processed on the island for manufacturing or trade in services which need raw materials from abroad and target the overseas market will be exempt from import tariffs, import value-added tax, and consumption tax.

II. The "zero-tariff" positive list management system will apply to raw and auxiliary materials, which are listed in the appendix. The contents of the list are subject to adjustments by the Ministry of Finance in concert with relevant departments based on Hainan's actual needs and regulatory conditions.

III. The parts and components listed in the appendix are subject to the "zero-tariff" policy and shall be used to repair aircrafts and vessels (including repairs of relevant parts and components), and will be exempted from import tariffs, import value-added tax, and consumption tax when any of the following conditions is met:

(I) they are used to repair aircrafts and vessels (including relevant parts and components) that enter into China and will be moved out of the country;

(II) they are used to repair aircrafts (including relevant parts and components) operated by aviation enterprises whose main operating base is located in Hainan; or

(III) they are used to repair vessels (including relevant parts and components) that are registered in Hainan and operated by shipping companies registered in Hainan as independent legal entities.

IV. "Zero-tariff" raw and auxiliary materials should only be used for the production of enterprises in Hainan Free Trade Port and should be subject to customs supervision. They should not be transferred on or outside of the island. If the said transfer is necessary due to bankruptcy or other reasons, approval shall be obtained and relevant payment of taxes shall be completed. For goods processed and manufactured with "zero-tariff" raw and auxiliary materials, if they are sold on the island or in the mainland, payment of the import tariffs, import value-added tax, and consumption tax imposed on the corresponding raw and auxiliary materials shall be made, and domestic value-added tax and consumption tax will be levied in accordance with regulations. Export of goods processed and manufactured with "zero-tariff" raw and auxiliary materials shall be governed by existing tax policies.

V. Enterprises that volunteer to pay import value-added tax and consumption tax when importing the raw and auxiliary materials set forth in the list may apply at customs declaration.

VI. Relevant departments shall strengthen supervision by means of information technology or otherwise to prevent and control possible risks, promptly investigate and deal with violations, and ensure the steady implementation of the "zero-tariff" policy for raw and auxiliary materials. Relevant departments of Hainan shall improve information sharing in aircrafts and vessels supervision.

VII. The circular shall come into force as of December 1, 2020.

Appendix: Hainan Free Trade Port List of "Zero-tariff" Raw and Auxiliary Materials

Ministry of Finance
General Administration of Customs State Taxation Administration
November 11, 2020
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Translated by the Foreign Affairs Office of Haikou Municipal Government
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