Notice on Preferential Policies for Corporate Income Tax in Hainan Free Trade Port Finance and Taxation [2020] No. 31
Hainan Provincial Department of Finance, State Taxation Administration Hainan Provincial Taxation Bureau:
To support the construction of the Hainan Free Trade Port, the following preferential policies on corporate income tax are hereby notified:
Encouraged Class Industrial Enterprises registered and substantially operating in the Hainan Free Trade Port shall be subject to a corporate income tax rate of 15% reduction.
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The term “Encouraged Class Industrial Enterprises” refers to enterprises primarily engaged in the industry projects specified in the Catalogue of Encouraged Class Industrial Enterprises in the Hainan Free Trade Port, with the main business income accounting for over 60% of the total enterprise income.
Substantial operation refers to the actual management institution of the enterprise being located in the Hainan Free Trade Port, and the enterprise implementing substantial comprehensive management and control over production, operation, personnel, accounts, and property. Enterprises that do not meet substantial operation criteria are not eligible for these benefits.
The Catalogue of Encouraged Class Industrial Enterprises in the Hainan Free Trade Port includes the “Guidance Catalogue for Industrial Structure Adjustment (2019 Edition),” the ” Catalogue of Industries for Foreign Investment (2019 Edition),” and the newly added Catalogue of Encouraged Class Industrial Enterprises in the Hainan Free Trade Port. If the above Catalogue are revised during the implementation period of this notice, the new version shall be implemented from the date of revision.
For enterprises with their headquarters located in the Hainan Free Trade Port that meet the conditions, only the income of their headquarters and branches located in the Hainan Free Trade Port shall be subject to a 15% tax rate. For enterprises with their headquarters located outside the Hainan Free Trade Port, only the income of their eligible branches located within the Hainan Free Trade Port shall be subject to a 15% tax rate. Specific tax management measures shall be implemented in accordance with the relevant regulations of the State Taxation Administration.
Income derived from overseas direct investment obtained by tourism, modern service, and high-tech industries established in the Hainan Free Trade Port is exempt from corporate income tax.
The term “income from new overseas direct investment” in this clause should meet the following conditions:
(1) Business profits obtained from newly established branches abroad; or dividends obtained from overseas subsidiaries with a shareholding ratio exceeding 20% (inclusive), corresponding to the new overseas direct investment.
(2) The statutory tax rate of enterprise income tax in the invested country (region) is not less than 5%.
The terms “tourism industry,” “modern service industry,” and “high-tech industry” refer to the Catalogue of Encouraged Class Industrial Enterprises in the Hainan Free Trade Port.
For enterprises established in the Hainan Free Trade Port, the one-time deduction of the current period’s cost expenses is permitted when calculating taxable income for the purchase (including self-construction and self-development) of fixed assets or intangible assets with a unit value not exceeding 5 million yuan. There is no longer an annual calculation for depreciation and amortization. For the purchase (including self-construction and self-development) of fixed assets or intangible assets with a unit value exceeding 5 million yuan, depreciation or amortization periods can be shortened, or accelerated depreciation and amortization methods can be adopted.
The term “fixed assets” in this clause refers to assets other than buildings and structures.
This notice shall be effective from January 1, 2020, to December 31, 2024.
Ministry of Finance State Taxation Administration
June 23, 2020
Notice on Individual Income Tax Policies for High-End and Scarce Talents in Hainan Free Trade Port Finance and Tax [2020] No. 32
Hainan Provincial Department of Finance, State Taxation Administration Hainan Provincial Taxation Bureau:
To support the construction of the Hainan Free Trade Port, the following individual income tax preferential policies are hereby notified:
(1) For high-end and scarce talents working in the Hainan Free Trade Port, the portion of their actual individual income tax burden exceeding 15% shall be exempted.
(2) The income eligible for the above preferential policies includes comprehensive income from the Hainan Free Trade Port (including wages, labour remuneration, royalties, and franchise fees), business income, and talent subsidy income certified by Hainan Province.
(3) Taxpayers shall enjoy the above preferential policies when settling their annual individual income tax in Hainan Province.
(4) High-end and scarce talents enjoying the above preferential policies shall be subject to a list-based management system, with specific management measures formulated by the Hainan Provincial Department of Commerce, Finance, and the State Taxation Administration.
(5) This notice shall be effective from January 1, 2020, to December 31, 2024.
Ministry of Finance State Taxation Administration
June 23, 2020
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