Chinese authorities have released a list of zero-tariff commodities in a bid to boost high-quality construction of Hainan Free Trade Port, said the Hainan provincial government.
The zero-tariff policy, jointly issued by the Ministry of Finance, the General Administration of Customs and the State Taxation Administration, is entitled "Notice on the Hainan Free Trade Port's Zero-Tariff Policy for Raw and Auxiliary Materials". It went into effect on Dec 1 and will be in place until 2025, when Hainan FTP starts islandwide Customs clearance operations.
The zero-tariff list is among the latest of the policies that have been released by the central and Hainan provincial authorities to promote construction of Hainan FTP, following the issuance of the Master Plan for the Construction of Hainan Free Trade Port on June 1.
The notice specifies that import duties, value-added import taxes and consumption taxes will be exempted for imported raw and auxiliary materials consumed in the importing company's own production process, for import-process-export production activities or for import-service-export work in the process of trade in services by enterprises registered as independent legal entities in the Hainan FTP.
The zero-tariff commodities list, the first of its kind in Hainan, covers a total of 169 items including foodstuffs such as coconuts, cereals, peanuts; resource products such as coal, wood, crude oil as well as chemicals such as xylene, aircraft components and ship maintenance materials.
In case materials need to be transferred or leave the island due to bankruptcy or other reasons, approval must be obtained and taxes should be paid. For goods processed and manufactured using zero-tariff raw and auxiliary materials to be sold on the island or in the other Chinese regions, import tariffs, value-added import taxes and consumption taxes of corresponding materials must be paid, and domestic value-added taxes and consumption taxes are to be collected according to regulations.
Officials with the Ministry of Finance said that the introduction of the tariff policy will cut production costs for enterprises and help attract more talent, logistics and capital flows to Hainan to help promote construction of Hainan FTP.
Liu Feng, director of the Research Center for Free Trade Port with Chinese Characteristics of Hainan Normal University, said that the zero tariff list will help enhance the competitiveness of Hainan's enterprises engaged in cargo and services trade, improve the efficiency of aviation maintenance and leasing, and enhance shipping services.
Before islandwide Customs clearance operations are launched in 2025, the Hainan FTP zero-tariff policy will cover four categories of commodities and be implemented through the management of one negative list and three positive lists.
Production equipment imported by enterprises for own use is subject to negative list management, while the zero-tariff policy for transportation vehicles and yachts for transportation and tourism, raw and auxiliary materials imported for production within Hainan and imported goods consumed by residents on the island will be subject to positive list management.
Sun Shiwen, deputy secretary-general of the Hainan provincial government, said Hainan FTP enjoys unique preferential policies such as zero tariffs, low tax rates and a simplified tax system. Sun added that the other three lists are expected to be released before the end of this year.