Group 1 - The Hainan Free Trade Port's processing value-added tax exemption policy has resulted in a cumulative domestic sales value of 110.8 billion yuan and a tax exemption of 8.6 billion yuan since the beginning of the 14th Five-Year Plan, as of late September this year [1] - The "zero tariff" policy for raw materials has attracted many "two ends outside" enterprises, leading to a significant increase in investment inquiries, with the import value reaching 270.6 billion yuan and tax reductions amounting to 50.9 billion yuan since the start of the 14th Five-Year Plan [2] - The Hainan Free Trade Port is preparing for its full island customs closure operation, which is expected to enhance the efficiency of business operations and attract more enterprises to register their vessels under the "China Yangpu Port" policy [2][3] Group 2 - The automation in production lines and the ongoing communication with customs for policy benefits indicate a positive outlook for local enterprises, with plans for celebrations to mark business milestones [3] - The establishment of a special customs supervision area across Hainan Island aims to provide opportunities and benefits for enterprises investing in the region, enhancing connectivity with global markets [3]

Group 1 - The Hainan Free Trade Port's processing value-added domestic sales tax exemption policy has been implemented for four years, with a total of 122 enterprises registered or approved for pilot programs, generating a processing value of approximately 100.3 billion yuan and tax exemptions of about 8.4 billion yuan [1] - The policy initially launched in July 2021 in the Yangpu Bonded Port Area and expanded to key parks outside customs special supervision areas in September 2022, with further expansion planned for September 2024 to include all qualifying enterprises in Hainan Free Trade Port [1] - The policy has diversified from initial sectors such as grain and oil, jade, and meat to include industries like pharmaceuticals, jewelry, and petrochemicals [1] Group 2 - Companies benefiting from the processing value-added policy have reported significant operational cost savings, with one company saving nearly 300,000 yuan, which has facilitated the development of contract manufacturing and new drug production [1] - The Haikou Customs will continue to focus on the effectiveness of policy implementation, optimize regulatory service models, and explore expanding the policy's applicability and convenience to attract more qualifying enterprises [2]

Core Viewpoint - The processing value-added duty exemption policy is a core policy of Hainan Free Trade Port, which is accelerating benefits for enterprises as the policy is further optimized post-closure [1] Group 1: Policy Overview - The processing value-added duty exemption policy allows goods processed in Hainan Free Trade Port with imported materials to be exempt from import duties if the value-added reaches or exceeds 30% [1] - The policy was first piloted in July 2021 in the Yangpu Bonded Port Area and has since expanded from 2.3 square kilometers to the entire Hainan Free Trade Port [1] - The General Administration of Customs issued interim measures clarifying the calculation methods for value-added and the procedural requirements for enterprises to apply for benefits [1] Group 2: Policy Adjustments - The threshold for enterprises to benefit from the policy has been relaxed, removing the requirement that the main business income of encouraged industries must account for over 60% of total revenue [2] - The range of import materials has been expanded to include "zero-duty" goods, allowing these goods to also benefit from the duty exemption when processed [2] - Hainan-produced materials can now be included in the value-added calculation, facilitating enterprises in meeting the 30% value-added requirement [2] - The scope of cumulative value-added processing has been broadened, allowing goods with overall value-added exceeding 30% to be sold domestically [2] Group 3: Implementation and Impact - As of 2023, 200 enterprises have applied for the processing value-added duty exemption policy, with 123 approved and 48 benefiting, resulting in a total domestic sales value of 10.03 billion yuan and duty exemptions of approximately 840 million yuan [3] - The 48 benefiting enterprises span 10 industry categories and 44 product application scenarios, including food processing, pharmaceutical manufacturing, and jewelry production [3]

Core Policy - The processing value-added tax exemption policy is a core tax policy of Hainan Free Trade Port, allowing goods with over 30% processing value-added to be exempt from import duties when entering the mainland [3][4][11] - This policy aims to encourage deep processing and has been gradually implemented since its introduction in July 2021 [7][11] Company Benefits - Hainan Hongyan Food Co., Ltd. benefits from a 12% reduction in import duties due to this policy, significantly lowering production costs compared to processing in mainland China [3][4] - Jingrun Pearl Technology Co., Ltd. enjoys a 21% reduction in import duties, allowing for substantial cost savings and expansion plans for retail outlets [7][11] - The policy has led to a total of 43 companies benefiting, with a total exempted sales value of 75.5 billion yuan and tax reductions of 6.5 billion yuan by March 2025 [7][11] Challenges Faced - Companies face challenges in understanding how to meet the 30% value-added requirement, leading to confusion and operational difficulties [8][9] - The lack of clear standards for what constitutes deep processing complicates cost calculations and compliance with the policy [9][10] - Fluctuations in international raw material prices and domestic market acceptance add complexity to production processes, making it difficult for companies to adapt quickly to policy requirements [9][10] Future Considerations - There are calls from companies for adjustments in the calculation of value-added from domestic raw materials to better align with the policy's intent [10] - The Hainan customs authority is working to optimize the application experience for companies and provide support to help them better utilize the policy benefits [11]