Ministry of Finance, National Health Commission, General Administration of Customs, State Administration of Taxation, National Medical Products Administration "Notice on the 'Zero Tariff' Policy for Drugs and Medical Devices in Hainan Free Trade Port"

Cai Guan Shui [2024] No. 21

People's Government of Hainan Province, Haikou Customs, Hainan Provincial Taxation Bureau of the State Administration of Taxation:
In order to support the construction of Hainan Free Trade Port, continuously expand the scope of "zero tariff" commodities, and increase the pressure test of closed-border operation, with the approval of the State Council, the "zero tariff" policy for drugs and medical devices in Hainan Free Trade Port is hereby notified as follows:
1. Before the whole island is closed, medical institutions, medical education colleges and universities, and medical research institutes (hereinafter referred to as relevant units) registered with independent legal person status and recognized in the Hainan Boao Lecheng International Medical Tourism Pilot Zone (hereinafter referred to as the Pilot Zone) can be exempted from import tariffs and import value-added tax if they import drugs and medical devices specified in Article 3 of this notice and use them in accordance with the provisions of this policy.
Relevant units that meet the conditions for enjoying the policy import drugs and medical devices and voluntarily pay the import value-added tax, and can apply for tax reduction and exemption procedures when handling tax exemption procedures.
2. The list of relevant units that meet the policy conditions shall be determined by the Administration of the Pilot Zone in conjunction with the health, drug supervision, education, science and technology, and finance departments of Hainan Province, as well as Haikou Customs, the State Administration of Taxation Hainan Provincial Taxation Bureau, etc., and dynamically adjusted, and notified to Haikou Customs and the State Administration of Taxation Hainan Provincial Taxation Bureau.
3. The drugs and medical devices that enjoy the exemption of import tariffs and import value-added tax in this notice (hereinafter referred to as duty-free drugs and medical devices) include:
(i) Imported drugs and medical devices that have been approved for registration in my country;
(ii) Drugs (excluding vaccines) and medical devices that have not yet been approved for registration in my country according to relevant regulations of the State Council, but are approved by the Hainan Provincial People's Government to be imported and used in the pilot zone (hereinafter referred to as licensed drugs and medical devices).
4. Before the relevant units import duty-free drugs and medical devices, the Administration of the Pilot Zone shall verify the registration certificate or relevant approval documents of each batch of imported drugs and medical devices together with the Hainan Provincial Drug Supervision and Administration Department, confirm that the imported goods of the relevant units are drugs and medical devices within the scope of the policy, and notify the customs and taxation departments where the relevant units are located.
When relevant units apply to the customs in the pilot zone for tax exemption and reduction procedures, the administration bureau of the pilot zone shall refer to the current management model of licensed drugs and medical devices, manage the drugs and medical devices applying for tax exemption, and upload relevant information to the traceability management platform of licensed drugs and medical devices in the pilot zone in a timely manner to supervise the whole process of tax-free drugs and medical devices.
5. Tax-free drugs and medical devices imported by medical colleges and universities and medical research institutes that meet the policy conditions are limited to self-use in the pilot zone.
6. Medical institutions that meet the policy conditions shall sell tax-free drugs and medical devices to patients who visit the institution on-site based on prescriptions (medical orders) issued by doctors of the institution. The sales volume shall comply with the diagnosis and treatment needs and relevant regulations on prescription management. Tax policies shall be implemented in accordance with the relevant provisions of the current domestic tax policies.
Except for the above circumstances, relevant units shall not transfer tax-free drugs and medical devices to individuals.
7. Duty-free drugs and medical devices imported by relevant units that meet the conditions for enjoying the policy shall be subject to customs supervision in accordance with the law within the customs supervision period; for duty-free drugs and medical devices sold to patients by medical institutions based on prescriptions (doctor's orders) issued by doctors of the institutions, the customs will no longer conduct subsequent supervision as specific duty-free goods.
8. Duty-free drugs and medical devices obtained by patients in medical institutions are final commodities for personal use and shall not be resold. They shall be used within the pilot zone and shall not be taken away or mailed out of the pilot zone.
9. If relevant units transfer duty-free drugs and medical devices in accordance with relevant regulations due to objective reasons, they shall be reviewed and approved by the Hainan Provincial Drug Supervision and Administration, Health and Health and other departments in advance. Among them, for duty-free drugs and medical devices within the customs supervision period, relevant units shall pay the import tariffs and import value-added tax to the customs of their location in accordance with regulations based on the confirmation materials of the above-mentioned departments.
If relevant units transfer duty-free drugs and medical devices within the customs supervision period in violation of the provisions of this notice, the customs shall handle it in accordance with regulations. If a patient violates the regulations and resells or takes or mails duty-free drugs or medical devices out of the pilot zone, the Pilot Zone Administration shall recover them. If they cannot be recovered, the Pilot Zone Administration shall handle them according to regulations.
The above transfer and sales shall be subject to domestic value-added tax in accordance with the regulations.
10. The Hainan Provincial People's Government shall implement the main responsibility and consult with the Ministry of Finance, the General Administration of Customs, the State Administration of Taxation, the National Health Commission, the State Drug Administration and other departments to formulate management measures to clarify the determination procedures for relevant units that meet the conditions for enjoying the policy, the management requirements for duty-free drugs and medical devices, the requirements for patients to use them in the pilot zone, etc., and clarify the handling standards, penalties and joint punishment measures for the illegal use and disposal of relevant units and the illegal sale, taking away and mailing of the above-mentioned goods by patients. The management measures shall be issued and implemented simultaneously with this notice.
11. From the implementation of the policy, the Hainan Provincial People's Government shall organize regular comparisons of the import, sales and use of duty-free drugs and medical devices, and strengthen the management and supervision of the use and disposal of duty-free drugs and medical devices (including prescriptions (medical orders) issued by doctors in medical institutions) by relevant units that meet the conditions for enjoying the policy, promptly investigate and deal with illegal and irregular behaviors, and report the implementation status to the issuing unit of this notice every three months, including the basic situation of relevant units that meet the conditions for enjoying the policy, the import and sales of duty-free drugs and medical devices by each unit, and tax reduction and exemption data.
The relevant departments of Hainan Province should improve the functions of the traceability management platform for licensed drugs and medical devices in the pilot zone, upgrade and transform the technical system to meet the needs of duty-free drugs and medical devices management, and at the same time strengthen information interconnection and interoperability, share information on relevant units, patients, duty-free drugs, medical devices, etc. that meet the conditions for enjoying the policy, and strengthen supervision and risk prevention and control.
12. The Hainan Provincial People's Government shall strengthen supervision and inspection of the implementation of this policy, prevent illegal and irregular behaviors, and report relevant situations to the issuing unit of this notice in a timely manner.
13. For violations of the provisions of this Notice, which constitute reselling, purchasing on behalf of others, smuggling of duty-free drugs and medical devices, or violations of customs supervision regulations, the customs shall handle them in accordance with relevant regulations; the Pilot Zone Administration shall include them in the credit records in accordance with relevant regulations, and patients shall not purchase duty-free drugs and medical devices within three years. If a crime is constituted, criminal liability shall be pursued in accordance with the law.
14. If relevant units and doctors use or dispose of duty-free drugs and medical devices in violation of regulations, they shall be dealt with in accordance with relevant regulations; if relevant units are held criminally liable in accordance with the law, this Notice shall be stopped from being applied, and the Pilot Zone Administration shall notify Haikou Customs and the State Administration of Taxation Hainan Provincial Taxation Bureau of the list and the start time of the stop of application.
15. This Notice is only applicable to the Hainan Boao Lecheng International Medical Tourism Pilot Zone and shall be implemented from the date of publication.

Ministry of Finance National Health Commission General Administration of Customs
State Administration of Taxation State Drug Administration