Notice of the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration on the “Zero-Tariff” Policy for Transport Vehicles and Yachts in the Hainan Free Trade Port

(Cai Guan Shui [2020] No. 54)

To: Department of Finance of Hainan Province, Haikou Customs District, Hainan Provincial Tax Service of the State Taxation Administration

In order to implement the Overall Plan for the Construction of the Hainan Free Trade Port, and with the consent of the State Council, the following notice on the “zero-tariff” policy for transport vehicles and yachts in the Hainan Free Trade Port is hereby issued:

Article I

Before the island-wide independent customs operations commence, enterprises registered in the Hainan Free Trade Port with independent legal person status and engaged in transportation or tourism (aviation enterprises must use the Hainan Free Trade Port as their main operating base) shall be exempt from import duty, import-stage value-added tax, and consumption tax on ships, aircraft, vehicles, and yachts imported for operational use in transportation and tourism.

The list of enterprises eligible for this policy shall be determined and dynamically adjusted by the competent departments of transportation, culture and tourism, market regulation, maritime affairs, and the Central and Southern Regional Administration of the Civil Aviation Administration of China, together with the Department of Finance of Hainan Province, Haikou Customs District, and the Hainan Provincial Tax Service, with reference to the transportation- and tourism-related items in the Catalogue of Encouraged Industries for the Hainan Free Trade Port.

Article II

Transport vehicles and yachts eligible for the “zero-tariff” policy shall be subject to positive-list management.
The specific scope is provided in the Appendix.
This list shall be dynamically adjusted by the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration, in conjunction with relevant departments, based on Hainan’s actual needs and regulatory conditions.

Article III

“Zero-tariff” transport vehicles and yachts shall be used solely for operational self-use by eligible enterprises in the Hainan Free Trade Port and remain under customs supervision.
Where transfer is required due to bankruptcy or other reasons, customs consent must be obtained and formalities completed before transfer.
If transferred to entities not eligible for this policy, relevant import duties, import-stage VAT, and consumption tax shall be repaid in full in accordance with regulations.
Transfers of “zero-tariff” vehicles and yachts are also subject to domestic VAT and consumption tax in accordance with national provisions.

Article IV

Enterprises that voluntarily choose to pay import-stage VAT and consumption tax on the listed transport vehicles and yachts may apply to do so at the time of customs declaration.

Article V

“Zero-tariff” transport vehicles and yachts must be registered and flagged in the Hainan Free Trade Port, operated in accordance with the provisions of the competent transportation, civil aviation, and maritime authorities, and subject to their supervision.

• Aircraft and vessels shall operate domestic and international routes originating from or stopping over in the Hainan Free Trade Port;

• Yachts shall operate within Hainan Province;

• Vehicles may engage in passenger or freight transport to and from the Mainland, with at least one end of the route located within the Hainan Free Trade Port, and may remain in the Mainland for no more than 120 cumulative days per year.
  Passenger and freight vehicles providing “point-to-point” or “immediate-return” services between the Hainan Free Trade Port and the Mainland are not subject to the 120-day limit.

Entities violating the above provisions shall reimburse the relevant import taxes in accordance with applicable regulations.

Article VI

The Hainan Provincial Government, in consultation with the departments of transportation, civil aviation, finance, customs, and taxation, shall jointly formulate the Administrative Measures for “Zero-Tariff” Transport Vehicles and Yachts in the Hainan Free Trade Port, specifying—among other matters—the procedures for determining eligible enterprises; requirements for registration, flagging, operation, and supervision; criteria for identifying routes originating from or stopping at the Hainan Free Trade Port; the applicable conditions and calculation methods for the 120-day stay limit in the Mainland; the recognition standards and administrative requirements for “point-to-point” and “immediate-return” transport services; and the handling of violations.

Article VII

Relevant departments of Hainan Province shall strengthen supervision through information-based management and inter-departmental coordination, enhance risk prevention and control, promptly investigate and address violations, and ensure the stable implementation of the “zero-tariff” policy for transport vehicles and yachts.
They shall also improve information sharing among provincial authorities concerning eligible enterprises and the supervision of “zero-tariff” vehicles and yachts.

Article VIII

This Notice shall take effect from the date of issuance.

Appendix: List of “Zero-Tariff” Transport Vehicles and Yachts for the Hainan Free Trade Port

Ministry of Finance
General Administration of Customs
State Taxation Administration
December 25, 2020

Annex

Hainan Free Trade Port "Zero Tariff" Transportation Vehicles and Yachts List

Note: The scope of goods eligible for the "Zero Tariff" is subject to the HS Code. Goods under serial number 72 exclude their parts.