Circular on Adjusting the “Zero-Tariff” Policy for Raw and Auxiliary Materials in the Hainan Free Trade Port

Cai Guan Shui [2025] No. 1
Issuing Authorities: Ministry of Finance, General Administration of Customs, State Taxation Administration
Date of Issue: January 10, 2025
Effective Date: January 10, 2025
Official Source: Government of the People’s Republic of China – Policy Database

To:

The Department of Finance of Hainan Province, Haikou Customs, and the Hainan Provincial Tax Service of the State Taxation Administration

To further support the construction of the Hainan Free Trade Port and improve the implementation of the “zero-tariff” policy for raw and auxiliary materials, the following adjustments are hereby announced upon approval by the State Council:

I. Expanded Scope of “Zero-Tariff” Raw and Auxiliary Materials

The positive list of “zero-tariff” raw and auxiliary materials is hereby updated. Items newly added include aircraft engine components, polyethylene and vinyl chloride, and other materials required for the key industries encouraged by the Hainan Free Trade Port.
The revised list replaces the previous one attached to Cai Guan Shui [2020] No. 42 and continues to be dynamically adjusted by the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration in coordination with relevant departments according to Hainan’s development and supervision needs.

II. Improved Rules on Transfer and Use

1. “Zero-tariff” raw and auxiliary materials shall continue to be used solely for the production and operation of enterprises within the Hainan Free Trade Port and remain under customs supervision.

2. In cases such as enterprise bankruptcy, where transfer is necessary, approval from customs must be obtained and relevant procedures completed.

3. Transfers between qualified “zero-tariff” beneficiaries within the Free Trade Port are now permitted under supervision, provided that the materials remain under the same “zero-tariff” regulatory framework.

4. If materials or goods processed using such materials are sold within the island or to the mainland, import tariffs, import VAT, and consumption tax applicable to the raw and auxiliary materials shall be paid in accordance with regulations, and domestic VAT and consumption tax shall be levied as required.

III. Strengthened Supervision

Customs, taxation, and finance departments shall enhance information sharing, strengthen digital supervision, prevent policy misuse, and ensure compliance with “zero-tariff” management requirements.

IV. Relationship with Previous Policies

Except as adjusted in this Circular, other provisions of Cai Guan Shui [2020] No. 42 on the “zero-tariff” policy for raw and auxiliary materials shall remain in force.

V. Implementation

This Circular shall take effect on the date of issuance.

Ministry of Finance
General Administration of Customs
State Taxation Administration
January 10, 2025