Chinese authorities have rolled out preferential income tax plans for companies and individuals in the southern island province of Hainan in order to build it into a globally influential free trade port.
Among the policies to be rolled out are those that reportedly would facilitate trade, liberalize investment, allow capital to flow freely cross-border, provide convenient transit for people, and provide for the safe flow of data. Improvements to the taxation and legal systems would be intended to support the development of high-tech industries, tourism, and modern services.
The proposed measures are to be adopted in several stages:
By 2025, preliminary policies to facilitate trade and liberalize investment shall be in place—including tax measures—with an independent customs regime on the island.
By 2035, policies to support people flow and transport, as well as capital and data flow shall also be in place, together with the further enhancement of the preliminary policies.
By 2050, the goal of developing the free-trade port shall be completed.
The proposed new customs and tax system would consist of a zero tariffs regime together with several tax incentives. For enterprises in “encouraged industries,” a reduced 15% corporate income tax rate shall apply.
Furthermore, up to the year 2025, a corporate income tax exemption shall apply to foreign-sourced dividend income received by newly established Hainan enterprises in the tourism, modern services, and high-tech industry sectors. Complete tax depreciation and accelerated depreciation regimes would also be available.
For personnel with high-end or urgently needed skills, the individual income tax would be levied at a maximum rate of 15%.
Specific sectors—including aviation, shipping, telecommunications, and finance—would be supported with tailored measures, and would guide the design of the lists of sectors open to foreign investment, i.e., the negative list and market-entry list.