Notice of the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration on the “Zero-Tariff” Policy for Self-use Production Equipment in the Hainan Free Trade Port

(Cai Guan Shui [2021] No. 7)

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

To implement the Overall Plan for the Construction of the Hainan Free Trade Port, and with the approval of the State Council, the following notice on the “zero-tariff” policy for self-use production equipment in the Hainan Free Trade Port is hereby issued:

Article I.
Before island-wide customs-closure operations commence, production equipment imported for self-use by enterprises registered in the Hainan Free Trade Port with independent legal person status shall be exempt from import duty, import-stage value-added tax, and consumption tax, except for goods whose import is prohibited or for which tax exemption is disallowed under national laws, administrative regulations, or relevant provisions, as well as equipment listed in the Negative List of Self-use Production Equipment Entitled to the “Zero-Tariff” Policy of the Hainan Free Trade Port (see Appendix).

Article II.
“Production equipment” refers to equipment required for activities such as infrastructure construction, processing and manufacturing, research and development, design, testing and maintenance, logistics and warehousing, medical services, and culture, sports and tourism, covering commodities under Chapters 84, 85, and 90 of the Customs Import and Export Tariff of the People’s Republic of China, except household appliances and their parts, accessories, and components.

Article III.
The list of enterprises meeting the conditions of Article I, as well as enterprises engaged in the industries covered in the Appendix, shall be jointly determined and dynamically adjusted by the Hainan Provincial Development and Reform Commission and the Hainan Provincial Department of Industry and Information Technology, together with the Hainan Provincial Department of Finance, Haikou Customs District, and the Hainan Provincial Tax Service, and reported in writing to Haikou Customs.

Article IV.
The Negative List of Self-use Production Equipment Entitled to the “Zero-Tariff” Policy of the Hainan Free Trade Port is attached. The list shall be dynamically adjusted by the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration, together with relevant departments, in light of Hainan’s actual needs and regulatory conditions.

Article V.
The Catalogue of Imported Major Technical Equipment and Products Not Eligible for Tax Exemption, the Catalogue of Products Imported for Foreign Investment Projects Not Eligible for Tax Exemption, and the Catalogue of Non-Tax-Exempt Imported Items under Domestically-Funded Projects shall not apply to this policy. Enterprises meeting the requirements may import equipment listed in those catalogues free of import duty, import-stage VAT, and consumption tax.

Article VI.
For ease of implementation, the Ministry of Finance and the General Administration of Customs shall, together with relevant departments, further define the scope of household appliances and parts, components, and accessories mentioned in Article II.

Article VII.
“Zero-tariff” self-use production equipment shall be used exclusively by eligible enterprises within the Hainan Free Trade Port and remain under customs supervision. Where transfer is necessary due to bankruptcy or other reasons, prior customs approval must be obtained and relevant procedures completed. If transferred to entities not eligible for this policy, import duties, import-stage VAT, and consumption tax shall be repaid as required. Such transfers are also subject to domestic VAT and consumption tax in accordance with national provisions.

Article VIII.
Enterprises that voluntarily choose to pay import-stage VAT and consumption tax when importing “zero-tariff” self-use production equipment may apply to do so at the time of customs declaration.

Article IX.
Relevant departments of Hainan Province shall strengthen supervision through information-based and coordinated management mechanisms, improve risk prevention and control, promptly investigate and handle violations, ensure the stable implementation of this policy, and enhance inter-departmental information sharing regarding eligible enterprises and the supervision of “zero-tariff” production equipment.

Article X.
This Notice shall take effect on the date of issuance.

Appendix: Negative List of Self-use Production Equipment Entitled to the “Zero-Tariff” Policy of the Hainan Free Trade Port

Ministry of Finance General Administration of Customs State Taxation Administration
February 24, 2021

Negative List of Self-Use Production Equipment Entitled to the “Zero-Tariff” Policy of the Hainan Free Trade Port