Notice on the Tax Policies for Goods Entering and Exiting the “First-Tier” and “Second-Tier” and Circulating Within the Island in the Hainan Free Trade Port

(Cai Guan Shui [2025] No. 12)

Issuing Authorities:
Ministry of Finance, General Administration of Customs, State Taxation Administration

Source: Ministry of Finance Website
Theme Classification: Public Finance, Banking and Auditing \ Taxation
Document Type: Notice
Date of Issuance: July 18, 2025

To: The People’s Government of Hainan Province, the Hainan Supervision Bureau of the Ministry of Finance, Haikou Customs, and the Hainan Provincial Tax Service of the State Taxation Administration

To advance the steady development of the Hainan Free Trade Port, and with the approval of the State Council, the following notice is hereby issued regarding the tax policies for goods entering and exiting the “First-Tier” and “Second-Tier” and circulating within the island of the Hainan Free Trade Port.

I. Goods Entering the “First-Tier”

A “First-Tier” is established between the Hainan Free Trade Port and other countries and regions outside the customs territory of the People’s Republic of China.
Goods entering the Hainan Free Trade Port through the “First-Tier,” except for goods whose importation is prohibited by the State and goods explicitly excluded from tariff exemption or bonded treatment under State laws and administrative regulations, shall be handled in accordance with the following provisions:

1. Catalog management for imported dutiable goods.
   Imported goods listed in the catalog of dutiable items shall be subject to import tariffs, import Value-Added Tax (VAT), and Consumption Tax in accordance with applicable regulations.
   The Ministry of Finance, the General Administration of Customs, and the State Taxation Administration, together with relevant departments, shall separately define the scope of the catalog.

2. Zero-Tariff policy.
   Enterprises registered in the Hainan Free Trade Port with independent legal-person status, public institutions within the Port, and non-enterprise private institutions in the fields of science and technology or education registered in the Port—recognized by the Ministry of Science and Technology and the Ministry of Education in conjunction with the Ministry of Civil Affairs, or by provincial-level authorities in conjunction with provincial civil-affairs departments (collectively referred to as Eligible Entities)—shall be exempt from import tariffs, import VAT, and Consumption Tax (hereinafter “Zero-Tariff”) for goods outside the catalog of dutiable imports.
   Eligible Entities may voluntarily choose to pay import tariffs, import VAT, and Consumption Tax (or import VAT and Consumption Tax only) and may apply to Customs accordingly.
   After voluntarily relinquishing eligibility for Zero-Tariff import of certain goods, the same entity may not apply again for Zero-Tariff import of goods in the same category within 12 months.

3. Other imports.
   Apart from items specified in (1) and (2) above, and existing bonded or duty-reduction/exemption imports, all other imported goods shall be subject to import tariffs, import VAT, and Consumption Tax according to relevant regulations.

4. Customs supervision.
   Customs shall establish electronic ledgers for Zero-Tariff goods, utilizing information-based and intelligent systems for management. Such goods shall not be handled as specific duty-exempt items under traditional procedures, and audits or verifications shall be conducted when necessary.

5. Eligible Entity list.
   The list of Eligible Entities shall be determined by the People’s Government of Hainan Province, adjusted dynamically as required, and filed with the Ministry of Finance, the General Administration of Customs, the State Taxation Administration, and other relevant departments for record.

II. Goods Entering the “Second-Tier”

A “Second-Tier” is established between the Hainan Free Trade Port and other regions within the customs territory of the People’s Republic of China (hereinafter “the Mainland”).
Zero-Tariff goods and their processed products entering the Mainland through the Second-Tier shall be handled as follows:

1. Eligible Entities shall complete relevant Customs procedures and make supplementary payments of import tariffs, import VAT, and Consumption Tax as if on imported materials and components.

2. Where import taxes have already been paid or supplemented at the First-Tier import stage or during circulation within the island, corresponding import taxes shall not be levied again.

3. Where domestic VAT has already been paid during island circulation, import VAT shall not be levied again.

4. Goods for which all import taxes have been paid or supplemented shall be managed under domestic circulation regulations and subject to domestic VAT and Consumption Tax in accordance with relevant provisions.

III. Goods Produced by Encouraged-Industry Enterprises

For goods produced by enterprises in encouraged industries within the Hainan Free Trade Port that contain imported materials and components and have achieved a value-added processing ratio of 30 percent or more, entry into the Mainland through the Second-Tier shall be exempt from import tariffs; import VAT and Consumption Tax shall be levied according to regulations.
The General Administration of Customs shall separately formulate the administrative measures and calculation formula for the value-added ratio.

IV. Circulation of Zero-Tariff Goods Within the Hainan Free Trade Port

1. The circulation of Zero-Tariff goods and their processed products between Eligible Entities that meet relevant conditions shall be exempt from supplementary payment of import tariffs, import VAT, and Consumption Tax, but domestic VAT and Consumption Tax shall be levied according to law.
   Eligible Entities may, as needed, voluntarily choose to pay import tariffs, import VAT, and Consumption Tax (or import VAT and Consumption Tax).

2. Where Eligible Entities transfer Zero-Tariff goods or their processed products to non-Eligible Entities or individuals within the Port, supplementary import tariffs, import VAT, and Consumption Tax shall be paid by reference to Article II of this Notice, and domestic VAT and Consumption Tax shall be levied accordingly.

3. Goods for which all import taxes have been paid or supplemented shall be managed under domestic circulation regulations and subject to domestic VAT and Consumption Tax according to law.

V. Goods Subject to Special Tariff Measures

For Zero-Tariff goods imported through the First-Tier that fall under any of the following Four Types of Measures—tariff-rate quotas, trade-remedy measures, suspension of tariff-concession obligations or additional tariff measures, and retaliatory tariff measures (excluding those granted exemptions)—the following shall apply:

1. Where Zero-Tariff goods fall under any of the Four Types of Measures, import through the First-Tier shall comply with Article I of this Notice and the relevant national regulations for those measures.
   When such goods or their processed products enter the Mainland through the Second-Tier, the provisions of Article II and the Four Types of Measures shall apply.
   When circulating within the island, by reference to Article II, import tariffs, import VAT, and Consumption Tax shall be supplemented, and the Four Types of Measures shall be implemented.
   Once such measures have been executed, they shall not be applied repeatedly.

2. Where Zero-Tariff goods themselves are not covered by the Four Types of Measures but their processed products are, the processed products—when entering the Mainland through the Second-Tier or circulating within the island—shall be handled according to their actual state of inspection, with reference to Articles II and IV of this Notice, and the Four Types of Measures shall be applied.
   After all import taxes on the Zero-Tariff goods have been paid or supplemented, their processed products shall be managed under domestic circulation regulations, and the Four Types of Measures shall no longer apply.

VI. Goods Entering or Leaving the Hainan Free Trade Port

Goods entering the Hainan Free Trade Port from the Mainland through the Second-Tier shall be managed under domestic circulation regulations.
Goods leaving the country through the First-Tier from the Hainan Free Trade Port shall be managed as exports.

VII. Management Requirements for Zero-Tariff Goods

1. Enterprises registered in the Hainan Free Trade Port with independent legal-person status and engaged in transportation or tourism may import Zero-Tariff vehicles, vessels, aircraft, and other operational transport vehicles and yachts used for transportation and tourism.
   Except where nationality registration, rights registration, and other matters are already governed by national laws, regulations, or departmental rules, Zero-Tariff transport vehicles and yachts shall be registered or flagged within the Hainan Free Trade Port, operated in accordance with the regulations of the competent transportation, civil-aviation, and maritime authorities, and placed under supervision.
   Aviation enterprises must use the Hainan Free Trade Port as their principal operational base; aircraft and vessels must operate domestic or international routes originating from or stopping over in the Port; yachts are limited to navigation within Hainan Province.
   Vehicles may engage in passenger and freight transport operations between the Port and the Mainland, provided that at least one end of each route lies within the Hainan Free Trade Port, and their cumulative stay in the Mainland shall not exceed 120 days per year.
   Passenger and freight vehicles operating “point-to-point” or “immediate-return” trips between the Port and the Mainland are not subject to the day limit.
   Violations of these provisions shall result in supplementary payment of the relevant import taxes in accordance with regulations.

2. Zero-Tariff goods used for the maintenance of aircraft, vessels, yachts, and production equipment (including related parts and components) that meet any of the following conditions shall be exempt from supplementary import tariffs, import VAT, and Consumption Tax when used for maintenance within Hainan Province, and may not be diverted to any other use thereafter:

   1. Used for maintaining aircraft and vessels (including parts and components) that enter China from abroad and are subsequently re-exported;

   2. Used for maintaining aircraft (including parts and components) operated by aviation enterprises with Hainan Province as their principal operational base;

   3. Used for maintaining vessels (including parts and components) registered in Hainan Province as their port of registry and operated by shipping companies established in the Hainan Free Trade Port with independent legal-person status;

   4. Used for maintaining yachts and production equipment (including parts and components) imported under the Zero-Tariff policy.

VIII. Determination and Administration of Eligible Entities

The procedures for determining Eligible Entities—including recognition standards, approving departments, management requirements, and other specific measures—together with detailed management measures for Zero-Tariff goods and the standards and methods for handling violations or imposing joint disciplinary actions, shall be specified by the People’s Government of Hainan Province in consultation with the relevant departments.

IX. Penalties

Any evasion of payable taxes in violation of this Notice that constitutes smuggling or violates customs-supervision regulations shall be handled by Customs and other regulatory agencies in accordance with the relevant laws and regulations; where a crime is constituted, criminal liability shall be pursued in accordance with the law.

X. Supervision and Reporting

The Hainan Supervision Bureau of the Ministry of Finance, Haikou Customs, and the Hainan Provincial Tax Service of the State Taxation Administration shall, together with relevant departments in Hainan Province, strengthen supervision and inspection of the implementation of this policy within the Hainan Free Trade Port to prevent illegal or non-compliant conduct.
Major issues encountered shall be promptly reported to the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration.

XI. Evaluation and Data Sharing

From the date of implementation, Hainan Province shall evaluate policy performance in a timely manner and regularly report to the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration.
Reports shall include information on Eligible Entities benefiting from the policy and import-export data of Zero-Tariff goods.
Customs, tax, and other departments shall ensure the timely sharing of data concerning import-tax payments or supplements and domestic-tax payments covered by this Notice.

XII. Policy Optimization

After comprehensive evaluation and when conditions permit, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration shall, together with relevant departments, optimize and adjust the policy content based on the actual needs of Hainan Province and prevailing regulatory conditions.

XIII. Other Applicable Policies

For matters not covered by this Notice, existing provisions shall apply—including bonded-area policies, tariff-reduction and exemption policies, cross-border e-commerce policies, and regulations governing special customs-supervision zones.

XIV. Date of Implementation and Repealed Documents

This Notice shall take effect from the date the Hainan Free Trade Port commences customs-closure operations.

The following documents are repealed simultaneously:

• Notice of the Ministry of Finance, General Administration of Customs, and State Taxation Administration on the Zero-Tariff Policy for Raw and Auxiliary Materials in the Hainan Free Trade Port (Cai Guan Shui [2020] No. 42)

• Notice on the Zero-Tariff Policy for Transport Vehicles and Yachts (Cai Guan Shui [2020] No. 54)

• Notice on the Zero-Tariff Policy for Self-Use Production Equipment (Cai Guan Shui [2021] No. 7)

• Notice on Clarifying the Product Scope of Zero-Tariff Self-Use Production Equipment (Cai Guan Shui [2021] No. 8)

• Notice on Adjusting the Zero-Tariff Policy for Raw and Auxiliary Materials (Cai Guan Shui [2021] No. 49)

• Notice on Adjusting the Zero-Tariff Policy for Self-Use Production Equipment (Cai Guan Shui [2022] No. 4)

• Notice on Adjusting the Zero-Tariff Policy for Transport Vehicles and Yachts (Cai Guan Shui [2023] No. 14)

• Notice on Adjusting the Zero-Tariff Policy for Raw and Auxiliary Materials (Cai Guan Shui [2025] No. 1)

Ministry of Finance
General Administration of Customs
State Taxation Administration
July 18, 2025