According to the information that Hainan Daily learned from the Reform Deepening Office of the CPC Hainan Provincial Committee (Office of the Free Trade Port Working Committee of the CPC Hainan Provincial Committee) on March 1, Hainan recently formulated the Core Policy Measures to Support the Construction of “Two Headquarters Bases”, and now it is soliciting public opinions from all sectors of society.

According to the relevant responsible person of the Reform Deepening Office of the CPC Hainan Provincial Committee (Office of the Free Trade Port Working Committee of the CPC Hainan Provincial Committee), Southeast Asia is one of the regions with the highest vitality and potential in economic development in the world today. As an open door to the Pacific Ocean and the Indian Ocean, Hainan Free Trade Port has the geographical advantage of connecting the mainland of China and Southeast Asia, the two most active markets in the world, and the policy advantage of great global competitiveness. It has drafted 15 core policy measures to help actively build the headquarters base for Chinese enterprises to enter Southeast Asia and other overseas countries and regions and the headquarters base for enterprises from Southeast Asia and other overseas countries and regions to enter the Chinese market (hereinafter referred to as the “two headquarters bases”).

The exposure draft reveals that the 15 core policy measures to support the construction of the two headquarters bases are listed as below:

To support foreign-funded enterprises investing in Southeast Asia and other overseas countries and regions to enjoy a reduced corporate income tax rate of 15%. Enterprises registered in the Hainan Free Trade Port that are in encouraged industries and engage in substantive operations are entitled to CIT at a reduced tax rate of 15%. For eligible capital expenditures of enterprises, one-off pre-tax deduction or accelerated depreciation and amortization may be allowed in the current period according to regulations.

To support citizens of Southeast Asia and other overseas countries and regions, employees of foreign-funded enterprises investing in Southeast Asia and other overseas countries and regions to enjoy a reduced individual income tax rate of 15%. For eligible high-end and urgently-needed talents who have resided in the Hainan Free Trade Port for 183 days in a tax year, the portion exceeding 15% of the actual tax burden of their individual income tax can be exempted according to regulations. For Chinese citizens who have been assigned to Southeast Asia and other overseas countries and regions by the substantive operating organization of the Hainan Free Trade Port for a long time due to work needs, the preferential policy service about their individual income tax will be comprehensively improved.

To support enterprises in Southeast Asia and other overseas countries and regions to enjoy the “zero-tariff” policy for certain imported goods. Before island-wide independent customs operations, eligible imported self-used production equipment, vessels, aircrafts, other operational means of transport and yachts used in transportation and tourism, and raw and auxiliary materials imported and used for production, or consumed in the production and processing activities (or in the process of trade in service) in a mode where final products will be exported to overseas markets can be exempt from tariffs according to regulations. Based on the market demand, we will expand the range of goods on the “zero-tariff” list at an appropriate time, and promote competitive products from Southeast Asia and other overseas countries and regions to be included on the “zero-tariff” list.

To support enterprises in Southeast Asia and other overseas countries and regions to enjoy the tariff-free policy for processing value-added products. For goods that are produced by encouraged industrial enterprises and do not contain imported materials or with an added value to the imported materials that are processed in the Hainan Free Trade Port of more than 30% (including 30%), the import tariff will be exempted when they enter the mainland of China through the “second line” customs. Investment enterprises in Southeast Asia and other overseas countries and regions are supported to independently choose and apply the value-added processing policy of the Hainan Free Trade Port or the RCEP policy.

To support enterprises in Southeast Asia and other overseas countries and regions to enjoy exemption from corporate income tax on newly increased overseas direct investment. Eligible enterprises in tourism, modern service and high-tech industries established in the Hainan Free Trade Port by Southeast Asian and other overseas countries and regions will be exempt from corporate income tax on newly increased overseas direct investment before 2025.

To support enterprises in Southeast Asia and other overseas countries and regions to enjoy an import and export management system featuring “free flow through the first line, and efficient control at the second line”. In the pilot zone of the import and export management system that features “free flow through the first line, and efficient control at the second line”, for the pilot enterprises that meet the corresponding conditions, goods entering the Free Trade Port Zone will be bonded or exempted from tax; the goods leaving the Free Trade Port Zone and sold in areas other than the Free Trade Port Zone within the territory of China will undergo customs declaration formalities according to the relevant provisions on the import of goods, and tax will be collected based on the actual state of goods. The entry of goods outside the Free Trade Port Zone within the territory of China into the Free Trade Port Zone will be deemed as export, and such goods will be subject to tax refund; For the inspection items of imported animal and plant products from Southeast Asia and other overseas countries and regions, the principle of “entering the enterprise first, and testing later” will be implemented; Goods entering and leaving between the pilot region and Southeast Asia and other overseas countries and regions which do not require quarantine inspection according to the laws, international treaties and agreements concluded or acceded which have clear provisions or involved the management of security access will be subject to customs release.

To implement a more convenient visa-free entry policy. We will gradually encourage people from Southeast Asia and other overseas countries and regions to apply for visa-free entry to Hainan for business, visits, family reunion, medical treatment, exhibitions and conventions, sport events and other purposes, and facilitate the implementation of the 15-day visa-free stay policy for tourist groups from Southeast Asia and other overseas countries and regions traveling by cruise ships.

To implement a more open policy on air transportation. We will promote airlines from Southeast Asia and other overseas countries and regions to carry passengers or freight via Hainan to a third country or region, expand air freedom arrangement including the fifth air freedom right necessary for building the Hainan Free Trade Port, and accelerate the implementation of the seventh air freedom right.

To support a free and convenient cross-border capital flow. We will support enterprises headquartered in the Hainan Free Trade Port and the affiliated enterprises invested and established in Southeast Asia and other overseas countries and regions to conduct capital pool business in accordance with regulations, and implement macro-prudential management of cross-border capital flows within a certain quota. We will make full use of the cross-border two-way investment policies of Qualified Foreign Limited Partner (QFLP) and Qualified Domestic Limited Partner (QDLP) of the Hainan Free Trade Port to continuously expand their effect.

To improve the service mechanism for headquarters in Southeast Asia and other overseas countries and regions. We will revise the Measures for the Administration of the Recognition of Enterprise Headquarters in Hainan Province, adjust the types of headquarter enterprises, optimize the conditions of recognition, simplify the recognition procedures, implement the recognition standards based on the actual development of core businesses such as investment, settlement, research and development, remove the restriction that the regional headquarters of multinational companies should be foreign-invested enterprises with independent legal person status, and relax the total assets requirements of the parent company of the regional headquarters of multinational companies. We will provide enterprises that will “go global” with consultation, risk warning and other services related to the whole filing process of Overseas Direct Investment (ODI). Strengthen the guidance on compliance operations for Hainan enterprises “going global”, and issue the Guidelines on Compliance Management for Overseas Investment of Enterprises for Hainan.

To set up the Southeast Asia Investment Center and Hainan Center. Hainan Provincial Bureau of International Economic Development is to set up a Southeast Asia Investment Center in Hainan and a representative office overseas, with an additional name of Hainan Center, to provide consultation and other services for enterprises from Southeast Asia and other overseas countries and regions that invest in Hainan and Chinese enterprises that invest in Southeast Asia and other overseas countries and regions, and promote exchanges and cooperation with Southeast Asia and other overseas countries and regions.

To support cooperation in education. We will establish and improve the scholarship system for international students from Southeast Asia and other overseas countries and regions, set up special scholarships for overseas students from Southeast Asia and other overseas countries and regions, try to increase the number of students from Southeast Asia and other overseas countries and regions studying in Hainan by 10% to 15% each year during the 14th Five-Year Plan period, and encourage the integration of industries, universities and research institutes to bring in talents with characteristics from Southeast Asia and other overseas countries and regions.

To support cooperation in tourism. We will speed up the construction of Sanya International Cruise Homeport, and support the development of cruise routes to Southeast Asia and other overseas countries and regions. Support well-known tourism service enterprises from Southeast Asia and other overseas countries and regions in setting up headquarters in the Hainan Free Trade Port. Support cooperation in tourism routes and tourism products for Southeast Asia and other overseas countries and regions.

To support cooperation in medical care. We will support the introduction of high-quality medical resources from Southeast Asia and other overseas countries and regions, and develop special medical care and health services for Southeast Asia and other overseas countries and regions, such as health management, traditional Chinese medicine health care, and distinctive health care.

To support cooperation in the seed industry, and expand cross-border trade in agricultural products. We will give full play to the role of Yazhou Bay Science and Technology City, Sanya, support enterprises and scientific research institutions to carry out international exchanges and cooperation in the seed industry with Southeast Asia and other overseas countries and regions, and expand cross-border trade in agricultural products steadily.

Opinions can be sent by E-mail to hnzimaoban@126.com or by mail to Room 423, Building 1, Hainan Plaza, No. 69, Guoxing Avenue, Meilan District, Haikou City, Hainan Province, 570203. Please mark “Opinions on the construction of the two headquarters bases” on the envelope.

Time for solicitation: March 1 to 30, 2023.