Notice on further clarifying the implementation of the preferential individual income tax policy for high-end and scarce talents in Hainan Free Trade Port

Finance Bureaus, Human Resources and Social Security Bureaus, Market Supervision and Administration Bureaus, Talent Development Bureaus of all cities and counties, and Taxation Bureaus of all cities and counties of Hainan Province under the State Administration of Taxation:
In accordance with the "Notice of the Ministry of Finance and the State Administration of Taxation on the Individual Income Tax Policy for High-end and Shortage Talents in Hainan Free Trade Port" (Finance and Taxation [2020] No. 32) and the "Notice of the People's Government of Hainan Province on Issuing the Interim Measures for the Management of the List of High-end and Shortage Talents Enjoying Individual Income Tax Preferential Policies in Hainan Free Trade Port" (Qiongfu [2022] No. 31, hereinafter referred to as the "Interim Measures for List Management"), the relevant matters are hereby notified as follows:
1. Income from Hainan Free Trade Port
Income from Hainan Free Trade Port refers to the comprehensive income (including wages and salaries, labor remuneration, royalties, and franchise fees) obtained by high-end and scarce talents from Hainan Free Trade Port, business income, and talent subsidy income recognized by Hainan Province, and the corresponding taxes are paid in Hainan Free Trade Port. Among them:
Wage and salary income refers to the wages, salaries, bonuses, year-end salary increases, labor dividends, allowances, subsidies and other income related to employment obtained by an individual from the employment unit in Hainan Free Trade Port.
Labor remuneration income refers to the income obtained by an individual from Hainan Free Trade Port for labor services in Hainan Free Trade Port.
Royalties income refers to the income obtained by an individual from Hainan Free Trade Port for publishing his works in the form of books, newspapers, etc.
Royalties income refers to the income obtained by an individual from Hainan Free Trade Port for providing the right to use patents, trademarks, copyrights, non-patented technologies and other franchises.
Business income refers to the income obtained from production and business activities in Hainan Free Trade Port.
The talent subsidy income recognized by Hainan Province shall be confirmed according to the recipients and methods of issuance. Those related to employment shall be included in the comprehensive income; those related to production and business activities shall be included in the business income.
2. Calculation of tax exemptions
High-end and scarce talents calculate the tax exemptions of Hainan Free Trade Port's personal income tax preferential policies according to the following method:
(I) Calculation of tax exemptions for residents' comprehensive income
Tax exemptions = (tax payable on comprehensive income - tax payable on comprehensive income × 15%) × Hainan Free Trade Port comprehensive income ÷ comprehensive income
(II) Calculation of tax exemptions for residents' business income
Tax exemptions = (tax payable on business income - tax payable on business income × 15%) × Hainan Free Trade Port business income tax payable ÷ business income tax payable
(III) Calculation of tax exemptions for non-resident individuals' related income
Tax exemptions for non-resident individuals' wages and salaries = (tax payable on wages and salaries - tax payable on wages and salaries × 15%) × Hainan Free Trade Port wages , salary income ÷ wages, salary income
Tax reduction and exemption for non-resident individual labor remuneration, royalties, and franchise royalties = Hainan Free Trade Port tax payable - Hainan Free Trade Port tax payable × 15%
Tax reduction and exemption for non-resident individual business income = (business income tax payable - business income tax payable × 15%) × Hainan Free Trade Port business income tax payable ÷ business income tax payable
III. Calculation method for cumulative residence for 183 days in Hainan Free Trade Port
High-end and scarce talents who enjoy the preferential personal income tax policy of Hainan Free Trade Port have accumulated a total of 183 days in Hainan Free Trade Port within a tax year, which means that high-end and scarce talents have actually stayed in Hainan Free Trade Port for 183 days in a tax year (from January 1 to December 31 of the Gregorian calendar). The number of days of stay is calculated as 1 day on the day of entry and exit of Hainan Free Trade Port. If there are multiple entries and exits in a tax year, the calculation is combined and accumulated.
IV. Confirmation and feedback process of the list of high-end and scarce talents
(I) Confirmation process for meeting the condition of "accumulated residence for 183 days". The Provincial Talent Development Bureau will push the list of high-level talents recognized by talent management departments at all levels in Hainan Province to the Provincial Department of Human Resources and Social Security before the end of December each year; the Provincial Taxation Bureau will push the list of personnel who meet the annual personal income standards in accordance with the annual income standards determined in the "Interim Measures for List Management" to the Provincial Department of Human Resources and Social Security before the end of January of the following year.
(II) Confirmation process for those who cannot meet the condition of "accumulated residence for 183 days" due to their professional characteristics. For specific personnel in the aviation, shipping, offshore oil and gas exploration and other industries registered in the Hainan Free Trade Port, if their cumulative residence in the Hainan Free Trade Port is less than 183 days in a tax year due to their professional characteristics, they shall submit applications to the Hainan Provincial Electronic Taxation Bureau through their employment or production and operation units before March 1 of each year starting from 2024 in accordance with the requirements of the Provincial Taxation Bureau and the Provincial Department of Human Resources and Social Security. The Provincial Taxation Bureau shall compile the information of applicants who meet the income standards and substantive operation requirements and submit it to the Provincial Department of Human Resources and Social Security.
(III) Feedback on the list. After the Provincial Department of Human Resources and Social Security compiles the above list, it shall push it to the social insurance agency, development and reform departments and other departments to verify the social insurance payment, credit, number of days of residence and other conditions. For the list of personnel who meet the condition of "cumulative residence for 183 days", the Provincial Department of Human Resources and Social Security shall provide the Provincial Taxation Bureau with a confirmed list of high-end and scarce talents who enjoy the individual income tax preferential policy before March 1 of the following year. For the list of personnel who cannot meet the condition of "cumulative residence for 183 days" due to their professional characteristics, the Provincial Department of Human Resources and Social Security shall organize an evaluation and approval after verifying the situation with the relevant departments, and promptly feedback the confirmed list of personnel who enjoy preferential treatment to the Provincial Taxation Bureau. The Provincial Taxation Bureau shall notify the preferential treatment personnel by appropriate means such as text messages.
V. Joint management and services between departments
(I) Qualified high-end and scarce talents can handle annual tax settlement in Hainan Free Trade Port and enjoy preferential policies. The business income tax settlement is handled from January 1 to March 31 of the following year, and the comprehensive income tax settlement is handled from March 1 to June 30 of the following year. Non-resident individuals who are unable to enter the country during the above period can entrust tax-related professional service agencies, other units or individuals to handle it on their behalf, or apply to the Provincial Department of Human Resources and Social Security through the Provincial Taxation Bureau more than 30 days before leaving the country for the qualification of high-end and scarce talents to enjoy the preferential policies of personal income tax. The Provincial Department of Human Resources and Social Security should confirm and feedback within 10 working days. For those who are confirmed as high-end and scarce talents, the tax department shall handle tax refunds in accordance with regulations.
High-end and scarce talents should retain labor relationship certification materials such as labor contracts or employment agreements signed with enterprises or units registered in Hainan Free Trade Port and substantially operating for more than one year within 5 years.
(II) If there is any objection to the high-end and scarce talents living in Hainan Free Trade Port for a total of 183 days, the Provincial Department of Human Resources and Social Security shall accept and feedback.
(III) The Provincial Department of Human Resources and Social Security, the Provincial Social Insurance Service Center, the Provincial Taxation Bureau and other departments shall strengthen in-process and post-process supervision, and jointly conduct random inspections on the enjoyment of personal income tax preferences by high-end and scarce talents. The Provincial Department of Human Resources and Social Security and the Provincial Market Supervision Administration shall, in accordance with their departmental functions, take the lead in resolving disputes as stipulated in the "Interim Measures for List Management" and jointly implement the personal income tax preferential policies for high-end and scarce talents in Hainan Free Trade Port.
VI. Other provisions
This notice shall be implemented from January 1, 2023, and the "Notice of the Hainan Provincial Department of Finance, the State Administration of Taxation, the Hainan Provincial Taxation Bureau, the Hainan Provincial Market Supervision Administration, and the Hainan Provincial Talent Development Bureau on the Implementation of the Personal Income Tax Preferential Policies for High-end and Scarce Talents in Hainan Free Trade Port" (Qiong Caishui [2020] No. 1019) shall be abolished at the end of the 2022 personal income tax final settlement.
Please report any issues and suggestions during implementation to the relevant provincial competent authorities for research and resolution.

Hainan Provincial Department of Finance
Hainan Provincial Taxation Bureau of the State Administration of Taxation
Hainan Provincial Department of Human Resources and Social Security
Hainan Provincial Market Supervision Administration
Hainan Provincial Talent Development Bureau of the Communist Party of China
December 23, 2022