Last updated: August 2025 Valid through: 31 December 2027

Overview

The Hainan Free Trade Port offers three corporate income tax (CIT) incentives for qualifying enterprises. All three remain in force through 31 December 2027.

Incentive 1 — Reduced 15% CIT Rate (Encouraged Industries)

Enterprises registered in the Hainan FTP and engaged in substantive operations in encouraged industries pay CIT at 15%, versus the standard 25% rate.

Who qualifies?

• Resident enterprises registered in the FTP
• Branches of resident enterprises located within the FTP
• Institutions and establishments of non-resident enterprises located within the FTP

Your primary business must fall within the FTP Encouraged Industries Catalogue, and income from that primary business must account for at least 60% of your total revenue.

What counts as "substantive operations"?

The enterprise must exercise real management and control, covering production, personnel, accounts, and assets, within the FTP. Specifically:

• If your enterprise is registered in the FTP with no branches outside it, all production, operations, personnel, accounting, and assets must be located within the FTP.
• If your enterprise is registered in the FTP but has branches outside it, the head office must exercise substantial and comprehensive management and control over all branch operations.
• If your enterprise is registered outside the FTP but has a branch inside it, that branch must have genuine production and operational functions, with corresponding operating income, employee compensation, and total assets within the FTP.

Any enterprise where production, operations, personnel, accounting, or assets are entirely outside the FTP does not qualify.

Do branches qualify for the 15% rate?

• Enterprise headquartered inside the FTP: 15% applies to the head office and any FTP-based branches only. Branches outside the FTP are excluded.
• Enterprise headquartered outside the FTP: 15% applies only to qualifying FTP-based branches. The head office and non-FTP branches are excluded.

How to claim

This incentive uses a self-assessment model — enterprises determine eligibility themselves, declare accordingly, and retain supporting documentation. It can be claimed at both quarterly prepayment and annual settlement stages.

Retain the following documents:

• Evidence that your primary business falls within the Encouraged Industries Catalogue, and that this business accounts for 60%+ of total revenue
• Evidence of substantive operations: total assets, total revenue, total employees, total salary expenses, and the proportion of each held within the FTP
• Any other materials confirming eligibility

Incentive 2 — CIT Exemption on Overseas Direct Investment Income (Tourism, Modern Services, High-Tech)

Enterprises in the tourism, modern services, and high-tech industries are exempt from CIT on income derived from new overseas direct investments made between 1 January 2020 and 31 December 2027.

What income qualifies?

• Operating profits from newly established overseas branches
• Dividends from newly established overseas subsidiaries where the FTP enterprise holds 20% or more equity

One additional condition: the statutory CIT rate in the invested country or region must be at least 5%.

What counts as "new overseas direct investment"?

• Establishing new overseas branches
• Setting up new overseas companies
• Increasing capital in existing overseas enterprises
• Acquiring equity in overseas enterprises

All investments must have been made between 1 January 2020 and 31 December 2027.

How to claim

Claimed at annual settlement stage. Retain the following:

• Evidence that your enterprise falls within tourism, modern services, or high-tech industries
• Details of the qualifying overseas investment: registration or approval documents, investment date, income type, and income attribution period
• Any other materials confirming eligibility

Incentive 3 — One-Off Deduction or Accelerated Depreciation/Amortisation on Newly Purchased Assets

FTP enterprises can accelerate the tax treatment of newly purchased fixed assets and intangible assets.

The two tiers:

• Unit value ≤ RMB 5 million: The full cost may be deducted in the current year as a one-off expense. Annual depreciation or amortisation is not required.
• Unit value > RMB 5 million: The enterprise may shorten the depreciation or amortisation period, or adopt an accelerated depreciation or amortisation method.

Note: "Fixed assets" here refers to fixed assets other than buildings and structures. For intangible assets, the deduction or accelerated amortisation begins in the year the asset becomes available for use. For self-developed intangible assets, the relevant date is when the asset reaches its intended purpose.

How to claim

Can be claimed at both quarterly prepayment and annual settlement stages. Retain the following:

• Proof of asset acquisition date (invoices, delivery records, completion settlement statements, or for self-developed assets, a statement confirming the date the asset reached its intended purpose)
• Accounting records for the relevant assets
• A reconciliation ledger showing the difference between tax treatment and accounting treatment

Note: Second-tier branches within the FTP using the audited collection method, and non-resident enterprise institutions/establishments, are also eligible for this incentive.

What this means in practice

These three incentives form the core of the FTP's corporate tax offer. The 15% rate is the headline figure, but the overseas investment exemption and accelerated depreciation rules are often more valuable for businesses actively investing and expanding. All three were extended in early 2025 and local implementation guidance was confirmed by the Hainan Tax Bureau in August 2025 — the mechanics are unchanged from the original framework.

The documentation requirements are strict and non-negotiable — tax authorities expect these records to be retained and available on request. Self-assessment means the burden of proof sits entirely with the enterprise.

This post is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional for guidance specific to your situation.