The Ministry of Finance, the General Administration of Customs and the State Administration of Taxation issued the "Notice on the 'Zero Tariff' Policy for Raw and Auxiliary Materials in Hainan Free Trade Port"

The Overall Plan for the Construction of Hainan Free Trade Port clearly states that before 2025, the raw and auxiliary materials imported from the island for self-use or consumed in production and processing activities (or in the process of service trade) in the "two-end-out" mode will be subject to "zero tariff" positive list management. On November 11, with the approval of the State Council, the Ministry of Finance, the General Administration of Customs, and the State Administration of Taxation jointly issued the "Notice on the "Zero Tariff" Policy for Raw and Auxiliary Materials in Hainan Free Trade Port", and released the "Hainan Free Trade Port "Zero Tariff" Raw and Auxiliary Materials List" (click "Read Original Text" at the end of the article to obtain the list), including agricultural products such as coconuts, resource products such as coal, chemical products such as xylene, and raw and auxiliary materials such as optical fiber preforms, as well as aircraft, other aircraft and ship maintenance parts, totaling 169 8-digit tariff items. Beneficiaries Enterprises registered in Hainan Free Trade Port and have independent legal person status.
Applicable conditions
"Zero tariff" raw and auxiliary materials are applicable to the consumption of raw and auxiliary materials in the following three situations:
※ Production for self-use
※ Production and processing activities in the "two ends outside" mode
※ Service trade in the "two ends outside" mode

1. When will the "zero tariff" list be implemented?
A: It will be implemented from December 1, 2020 until the whole island is closed for operation. According to the requirements of the "Overall Plan for the Construction of Hainan Free Trade Port", the whole island will be closed for operation before 2025.

2. What taxes are exempted for "zero tariff" raw and auxiliary materials?
A: Import tariffs, import value-added tax and consumption tax.

3. How are "zero tariff" raw and auxiliary materials managed?
A: "Zero tariff" raw and auxiliary materials are managed by positive list, and the goods included in the list can enjoy the "zero tariff" policy. The content of the list will be dynamically adjusted by the Ministry of Finance in conjunction with relevant departments based on Hainan's actual needs and regulatory conditions.

4. How are the parts in "zero tariff" raw and auxiliary materials managed?
Answer: The parts imported under the "zero tariff" policy for raw and auxiliary materials should be used for the maintenance of aircraft and ships (including the maintenance of related parts). Specifically include:
(i) Used to repair aircraft and ships (including related parts) that enter the country from abroad and are re-exported;
(ii) Used to repair aircraft (including related parts) operated by aviation companies with Hainan as the main operating base;
(iii) Used to repair ships (including related parts) operated by shipping companies registered in Hainan with independent legal person status and with ports in Hainan Province as their port of registry.

5. How to manage the production of "zero tariff" raw and auxiliary materials for self-use?
Answer: "Zero tariff" raw and auxiliary materials are limited to production and use by enterprises in Hainan Free Trade Port, subject to customs supervision, and may not be transferred within the island or leave the island. If the transfer or departure is indeed necessary due to enterprise bankruptcy or other reasons, it should be approved and the procedures for paying back taxes should be handled.

6. How to manage the sale of goods processed and manufactured with "zero tariff" raw and auxiliary materials within the island or sold to the mainland?
Answer: The import tariffs, import value-added tax and consumption tax of the corresponding raw and auxiliary materials need to be paid, and the domestic value-added tax and consumption tax shall be levied according to the regulations.

7. How to manage the export of goods processed and manufactured with "zero tariff" raw and auxiliary materials?
Answer: According to the current tax policy on export goods.