Core Insights - The unique tax system of "zero tariffs, low tax rates, and simplified tax structure" is a competitive advantage for Hainan Free Trade Port, which will release greater policy dividends as the island officially operates under customs closure [1] - Hainan is building an "open and orderly" tax environment to attract global resources while preventing systemic risks, achieving the dual goals of "loose management and strict control" [1] Tax Policy Changes - The "zero tariff" policy will shift to a negative list model post-customs closure, expanding the number of tariff-exempt goods from 1,900 to approximately 6,600, covering 74% of production materials, a 53% increase from before [2] - The policy for duty-free domestic sales of processed goods with a value-added rate of 30% will be optimized, removing the requirement for a 60% revenue share from encouraged main business activities, thus broadening the scope of beneficiaries [2] - The tax advantages will significantly lower procurement costs for enterprises importing raw materials and production equipment, enhancing profit margins for manufacturing [2] Industrial Transformation - The tax policies will fundamentally change Hainan's industrial layout, transitioning from a "multi-point distribution" model to a "core agglomeration area + regional collaboration" model [3] - Key sectors such as raw material-dependent manufacturing, deep processing of agricultural products, and biomedicine are expected to benefit significantly, potentially forming high-end manufacturing and specialty agricultural processing zones [3] - The shift from a "positive list" to a "negative list" management model will enhance customs efficiency and provide a solid institutional guarantee for the free flow of goods [3] Regulatory Framework - Hainan is establishing a transparent and orderly tax environment through defined eligibility criteria, anti-tax avoidance clauses, and strict anti-money laundering mechanisms [4] - The core requirement of "substantive operation" distinguishes Hainan from traditional tax havens, ensuring that tax incentives are closely linked to real economic activities [4][5] Simplified Tax System - The upcoming "simplified tax system" reform aims to promote offshore trade by consolidating various taxes into a sales tax, which will be levied at the retail stage for goods and services [6] - A transitional policy is suggested to allow tax deductions or refunds for pre-reform inventory, preventing tax arbitrage [6] - A "three chains integrated" regulatory system is proposed to enhance monitoring of supply chains, financial flows, and invoicing, ensuring compliance and market inclusivity [7]

Core Viewpoint - The announcement by the Hainan Provincial Taxation Bureau, Provincial Finance Department, and Market Supervision Administration aims to clarify the substantive operation standards for enterprises in encouraged industries within the Hainan Free Trade Port, promoting high-quality development in the region [1][2]. Group 1: Policy Implementation - The policy execution period is set from January 1, 2025, to December 31, 2027 [1]. - The announcement details the criteria for determining substantive operations, including production and management location, personnel, accounting, and assets [1]. Group 2: Substantive Operation Requirements - In terms of production and operation, enterprises must meet one of two conditions: either have their main production and operation location in the Free Trade Port or have a management institution that exercises substantial control over production and operations located in the Free Trade Port [1]. - For accounting management, enterprises are required to store accounting documents and open basic deposit and main business settlement accounts within the Free Trade Port [2]. - The asset requirements stipulate that necessary production and operation assets must be used within the Free Trade Port, with specific considerations for transportation assets and intangible assets like patents [2].

Core Points - The 2025 Hainan "Double 15" policy is a significant tax incentive for enterprises and high-end talent operating in Hainan, capping corporate and personal income tax rates at 15% [2][7][21] Group 1: Corporate Income Tax Policy - The corporate income tax rate is set at 15% for companies that are registered and substantively operating in Hainan, with a requirement for real office space, employees, and business activities in the region [2][8] - Eligible industries must align with the "Encouraged Industry Directory" for Hainan Free Trade Port, such as tourism, renewable energy, and healthcare [3][10] - The policy is based on the official documents issued by the Ministry of Finance and the State Administration of Taxation, specifically document 财税〔2025〕3号 [3][18] Group 2: Personal Income Tax Policy - The personal income tax rate is also capped at 15% for high-end talent recognized by Hainan's talent management departments or those earning over 300,000 RMB in a tax year [4][11] - Individuals must reside in Hainan for at least 183 days within a tax year, with specific allowances for business trips and training [4][12] - The policy is governed by the document 财税〔2025〕4号, which extends the tax incentives until December 31, 2027 [19][13] Group 3: Key Considerations for Policy Enjoyment - "Substantive operation" is a strict requirement for both enterprises and individuals to qualify for tax benefits, with tax authorities conducting thorough checks [6][14] - Companies must submit a "Substantive Operation Self-Assessment Commitment Form" through the Hainan Electronic Tax Bureau to claim corporate tax benefits [17] - The upcoming full closure of Hainan in 2025 will broaden eligibility for tax incentives, allowing all non-negative list industries to benefit from the 15% corporate tax rate [15][20]