Notice on Value Added Tax Policies for International Transport Vessels in Hainan Free Trade Port issued by the Ministry of Finance, the Ministry of Transport and the State Administration of Taxation

Hainan Provincial Department of Finance, Department of Transportation, Hainan Provincial Taxation Bureau of the State Administration of Taxation, Hainan Provincial Maritime Safety Administration:
In order to support the construction of Hainan Free Trade Port, according to the Overall Plan for the Construction of Hainan Free Trade Port, the relevant VAT policies for international transport ships are hereby notified as follows:
1. For ships sold by domestic shipbuilding enterprises to transport enterprises and meeting the following conditions at the same time, the VAT refund policy shall be implemented, and the transport enterprises that purchased the ships shall apply for tax refunds from the competent tax authorities.
1. The purchased ship is registered in "China Yangpu Port".
2. The purchased ship is engaged in international transport and Hong Kong, Macao and Taiwan transport business.
2. The tax refundable amount of the transport enterprise that purchased the ship is the VAT amount paid when it purchased the ship.
3. The transport enterprise that purchased the ship shall provide the following information when applying for tax refunds from the competent tax authorities:
1. The "Ship Ownership Registration Certificate" issued by the ship registration management department indicating that the port of registry is "China Yangpu Port".
2. Documents proving that the transport enterprise and the purchased ship are engaged in international transport and Hong Kong, Macao and Taiwan transport business. Those engaged in international bulk liquid dangerous goods and passenger transportation shall submit a valid "International Ship Transportation Business License" and "International Maritime Transport Ship Registration Certificate"; those engaged in international container and general cargo transportation shall submit a valid transportation management department registration certificate; those engaged in the transportation of bulk liquid dangerous goods and general cargo from the mainland to Hong Kong and Macao shall submit a valid transportation management department registration certificate; those engaged in transportation between the mainland and Taiwan shall submit a valid "Taiwan Strait Cross-Strait Waterway Transportation License" and "Taiwan Strait Cross-Strait Ship Operation Certificate".
3. Other materials required by the competent tax authorities.
4. If the value-added tax paid by the transport enterprise for the purchase of ships has been deducted from the output tax amount, it shall not apply for a tax refund; if a tax refund has been applied for, it shall not be deducted from the output tax amount.
5. If the transport enterprise no longer meets the tax refund conditions of the "Notice", it shall apply for business changes with the transportation department and go through the procedures for paying the refunded tax with the competent tax authorities during the tax declaration period of the next month after the conditions are changed.
The amount of VAT to be paid = the amount of tax indicated on the special VAT invoice for the purchase of the ship × (net value ÷ original value).
Net value = original value - accumulated depreciation.
VI. If a transport enterprise pays back taxes in accordance with Article 5 of this Notice, the amount of VAT indicated on the tax payment certificate obtained from the tax authority for the release of taxes shall be allowed to be deducted from the output tax.
VII. The State Administration of Taxation may formulate specific tax management measures based on this Notice.
VIII. The transportation, maritime and taxation departments of Hainan Province shall establish a contact and cooperation mechanism, share regulatory information, and jointly carry out subsequent related work. IX. This Notice shall be implemented from October 1, 2020 to December 31, 2024. The specific time of the applicable policy shall be based on the issuance date of the "Ship Ownership Registration Certificate". Ministry of Finance Ministry of Transport State Administration of Taxation September 3, 2020