This aerial photo taken on Jan. 13, 2023 shows a view of the container terminal of Haikou Port in Haikou, south China’s Hainan Province. After exceeding 100 billion yuan (about $14.92 billion) for the first time in 2021, the total import and export value of Hainan Free Trade Port exceeded 200 billion yuan (about $29.84 billion) to reach 200.95 billion yuan (about $29.98 billion) in 2022, an increase of 36.8 percent. (Xinhua/Pu Xiaoxu)
The value of processed commodities benefiting from the tax exemption policy for products processed in the Hainan Free Trade Port (FTP), with a minimum of 30 percent value-added and sold in the rest of China, has surpassed 10 billion yuan ($1.4 billion) for the first time, official data showed.
According to Haikou Customs, a total of 122 enterprises have registered or enjoyed the duty-free policy in the Hainan FTP, with the total value of their domestic sales reaching 10.03 billion yuan, according to a report seen on the Hainan provincial government’s website on Sunday.
Over the past four years, the policy has expanded from covering grain, oil, jade, and meat to include pharmaceuticals, jewelry, and petrochemicals, with tax exemptions totaling 840 million yuan, the report said.
The 30 percent value-added processing tax exemption policy is driving industrial expansion, structural optimization, and local job growth, serving as a key engine for high-quality economic development in Hainan.
The policy is one of the cornerstones of the Hainan FTP’s tax framework, featuring free flow through the “first line” and efficient control at the “second line.” The “first line” refers to the demarcation line between Hainan FTP and other countries and overseas regions while the “second line” refers to the dividing line between Hainan FTP and other regions on the Chinese mainland, according to the Ministry of Commerce.
According to a document released by the Hainan International Investment Promotion Bureau, products originating from Hainan, including imported intermediary products whose added value exceeds 30-percent after domestic processing, are exempt from taxes when entering the rest of China.
The tax exemption policy was first implemented in the Yangpu Bonded Port of Hainan in July 2021. In September 2024, the policy was extended to cover all eligible enterprises based in the Hainan FTP.
As the first enterprise to adopt the tax-exemption policy for goods with 30 percent or more value-added processing within the FTP, Yangpu’s Ausca International Oils and Grains Co Ltd has scaled up production to nearly 1 million tons, annually, targeting an output value of 8 billion yuan this year, said a company representative, adding that the company has expanded its market share in China by taking advantage of the preferential taxation policy.
An aerial drone photo taken on May 27, 2025 shows a view of the Ausca International Oils and Grains Co., Ltd., located within the Yangpu Free Trade Port Zone under the Yangpu Economic Development Zone in Danzhou, south China’s Hainan Province. In June 2020, China released a master plan to build the whole of Hainan Island into a globally influential and high-level free trade port by the middle of the century. Photo: Xinhua
Similarly, Hainan Zambon Pharmaceutical Co Ltd, a wholly-owned foreign-invested company set up by Italy’s Zambon Group in 1998, has leveraged the policy to save 300,000 yuan in costs, accelerating the development of its consignment manufacturing business and the introduction of new drug production, a company representative said.
Meanwhile, Haikou Customs aims to enhance policy efficiency, optimize regulatory services, and expand the policy’s coverage to attract more foreign enterprises, to help promote institutional openness and high-quality development in the Hainan FTP.
China’s central government released a master plan on June 1, 2020, setting out policies to support the construction of the Hainan FTP. This has the aim of building Hainan Province, on the southern coast of China, into a globally significant free trade port by 2050. The policies will be rolled out in stages and are supported by a series of tax and legal system reforms. The tax policy is summarized as consisting of “zero-tariffs, low tax rates, a simplified tax system, and an enhanced legal system.”
Global Times