Hainan’s Zero-Tariff Policy for Foreign Companies

“Zero tariff” is often presented as if every Hainan company can import anything tax-free. The real policy is more useful, and more conditional.

After Hainan began island-wide special customs operations on 18 December 2025, qualifying entities became able to import goods outside the dutiable-goods catalogue without import duty, import VAT and consumption tax, subject to the applicable rules and customs supervision.

What taxes can the policy cover?

For qualifying zero-tariff imports, the relief can cover:

• customs duty;
• import value-added tax; and
• consumption tax at import, where applicable.

This is an import policy. It does not remove corporate income tax, domestic VAT, payroll taxes or other obligations arising from the company’s operations.

Who can qualify?

The post-customs-operations policy identifies eligible entities that include companies registered in Hainan Free Trade Port with independent legal-person status, together with other specified organisations.

Eligibility is not based on foreign ownership. A foreign-owned Hainan company may qualify on the same policy basis if it meets the entity, activity, goods and supervision requirements.

Some categories have additional rules. For example, zero-tariff operating vehicles, vessels, aircraft and yachts are tied to transport or tourism operations and must comply with registration, route and use conditions.

Which goods are covered?

The policy uses a dutiable-goods catalogue approach. Goods outside the catalogue may qualify, while prohibited, restricted or specially managed goods remain subject to the relevant controls.

The scope is wide, and it has grown. The zero-tariff list now covers more than 6,600 tariff lines — roughly 74% of all tariff items — up from around 1,900 before island-wide customs operations began. In practice that means most of what a trading or manufacturing company imports has a real chance of qualifying, but you still have to check your specific product rather than assume it.

The classification of the product matters. Before placing an order, confirm:

• the customs commodity code;
• whether the item appears in the dutiable catalogue;
• whether quotas, trade-remedy measures or additional duties apply;
• whether the importing company is an eligible entity; and
• how the goods will be used and tracked after import.

A supplier’s statement that a product is “tax free in Hainan” is not a customs determination.

What happens when goods go to mainland China?

Hainan and the rest of mainland China are separated by the customs “second line”. Zero-tariff goods and products made from them can trigger import taxes when entering the mainland.

The tax treatment depends on the goods and transaction. In general, companies should model both the tax-free entry into Hainan and the possible second-line tax cost.

An important exception can apply to qualifying goods produced by encouraged-industry enterprises where processing in Hainan creates at least 30% value added. Those goods may be exempt from import duty when entering the mainland, while import VAT and consumption tax are handled under the applicable rules.

The calculation and filing requirements should be confirmed before designing a supply chain around this policy.

Can a consulting company benefit?

Usually not in a meaningful direct way unless it imports qualifying goods for its own eligible operations. A service company’s main Hainan advantages may lie elsewhere, such as market access, location, talent or the 15% corporate income tax policy if it qualifies.

Zero tariff is most relevant to businesses with a genuine goods flow: production equipment, inputs, processing, transport, tourism assets, distribution or other permitted imports.

What records will the company need?

Customs can use electronic accounts and other supervision tools to track zero-tariff goods. A company should be prepared to maintain:

• customs classifications and declarations;
• purchase and shipping records;
• inventory and use records;
• processing and value-added calculations where relevant;
• records of island transfers; and
• documents for goods crossing the second line.

The commercial team, accountant and customs adviser should agree on the process before the first shipment.

A decision checklist

1. Is the importer an eligible Hainan entity?
2. Is the product outside the dutiable-goods catalogue?
3. Are any prohibitions, restrictions or trade measures involved?
4. Will the goods stay in Hainan, leave China or enter the mainland?
5. Can the company meet tracking and customs requirements?
6. Does processing in Hainan qualify for the value-added policy?

If those answers are unclear, the zero-tariff saving should not yet appear in the business plan.

Related reading

• What Hainan’s new customs system means for business
• How to set up a company in Hainan Free Trade Port
• China corporate tax for foreign companies

Official sources

• Tax policy for goods crossing Hainan’s first and second lines
• Official launch of island-wide special customs operations
• 2026 Hainan Free Trade Port Investment Guide

Customs treatment depends on the entity, product classification, use and destination. Confirm the current policy and filing method before signing purchase or logistics contracts.

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