A six-year-old child named Lele from Zhejiang Province underwent successful cochlear implant surgery at Boao Super Hospital in Hainan on May 30. The device, imported duty-free under Hainan's zero-tariff policy, promises Lele a clearer world of sound.

This case offers a compelling glimpse into how the Hainan Free Trade Port (FTP)'s expanding tax incentives are translating into tangible benefits for both businesses and individuals. 

The year 2025 marks the fifth anniversary of the Master Plan for the Construction of the Hainan Free Trade Port. Over the past five years, Hainan has implemented 14 key tax policies under its early-stage institutional framework centered on five core principles: zero tariffs, low tax rates, a simplified tax system, strong rule of law, and phased implementation. Key measures include three dedicated “zero-tariff” lists, covering raw materials, self-use production equipment, and vehicles & yachts, alongside a preferential 15% cap on both corporate and individual income. These tax arrangements are gradually forming a comprehensive, pro-growth fiscal ecosystem characterized by reduced costs and enhanced legal clarity. Together, these reforms are turning Hainan into a magnet for capital, talent, goods, and services. As the Hainan FTP moves steadily from framework design to operational readiness, its favorable tax regime continues to inject dynamism into the province’s development trajectory.

Zero-tariff policy brings momentum to Hainan: Real benefits for industry and individuals alike

Work at the engine maintenance base of Haikou Engine Service Co., Ltd.—a subsidiary of HNA Aviation—was in full swing on May 30. Technicians were busy inputting component data, installing aircraft boosters, and machining critical components.

Thanks to the Hainan FTP's tax incentives, the company is exempt from import duties and value-added tax (VAT) when importing self-use equipment. Aircraft materials imported into the customs supervision zone where the company operates also benefit from bonded treatment (meaning that duties are not levied on imported materials so long as they remain within the zone), substantially reducing operational costs and strengthening the company’s competitive edge in the global engine maintenance market.

Technicians inspect a jet engine at the bonded maintenance base in Haikou Airport Comprehensive Bonded Zone, Hainan Province, on May 30, 2025. (Photo: Yuan Chen / Hainan Daily)

According to Hu Tao, Deputy General Manager of HNA's Procurement Department, between 2021 and May 2025, the company imported over 10 shipments of engines, air circulation systems, and other items worth about 350 million yuan ($48.7 million) under the zero-tariff list for raw and auxiliary materials, saving more than 44 million yuan ($6.1 million) in tariffs and VAT. It also imported two aircraft engine brackets worth nearly one million yuan under the list for self-use equipment, saving a further 300,000 yuan (approx. $42,000). More than 500 consignments of aircraft components were re-imported under the FTP’s duty-free maintenance re-entry policy, saving over 30 million yuan ($4.2 million) in duties.

"These zero-tariff policies operate on an 'exemption upon declaration' basis. Once approved, duties are waived immediately. The financial relief is both tangible and substantial," said Hu.

As of May 26, 2025, total imports under Hainan’s three zero-tariff lists had reached 22.69 billion yuan ($3.2 billion), with 4.32 billion yuan ($0.6 billion) in duties waived, according to Haikou Customs.

Over recent years, as the Hainan FTP continues to mature, the zero-tariff policy framework has been consistently refined and expanded. In September 2024, a new zero-tariff policy for pharmaceuticals and medical devices was introduced, further widened the scope of eligible goods and extended the benefits to individual consumers.

A key milestone came on December 31, 2024, when Boao Super Hospital successfully declared the first batch of medical products imported under the new policy. This shipment, comprising cochlear implants and processors valued at 572,000 yuan (approx. $80,000), was quickly cleared by Boao Airport Customs, resulting in tax savings of 74,000 yuan (approx. $10,000) and sounding the starting gun on the official implementation of Hainan’s zero-tariff policy for medical products.

The impact has been widely felt by the public. As of May 26, 2025, the Lecheng International Medical Tourism Pilot Zone had imported 37 batches of duty-free medical products under the policy, totaling 72.53 million yuan ($10.1 million) in value, with 9.78 million yuan ($1.4 million) in tax relief granted.

A representative from the Tax Policy Division of the Department of Finance of Hainan Province noted that since the implementation of the three “zero-tariff” lists, Hainan has continually optimized and expanded the policy to meet market needs, with nearly 2,000 goods now covered. Eligible importers enjoy full exemptions from import duties, VAT, and consumption tax, helping enterprises reduce production costs, boost profits, and elevate the attractiveness of the Hainan FTP as an investment destination.

"Dual 15%" income tax cap attracts high-quality enterprises and talent to Hainan

"The reduced 15% corporate income tax rate has significantly eased our tax burden as a company in the strategic emerging industries," said Wang Qi, Chairman of Hainan Jintai Pharmaceutical Co., Ltd. "The FTP’s personal income tax incentives have enabled us to attract more high-caliber professionals to our company, strengthening our team’s overall capabilities."

In recent years, thanks to the favorable policies of the Hainan FTP, Jintai Pharmaceutical has seized opportunities and transformed itself from a commercial pharmaceutical enterprise into a full-fledged pharmaceutical manufacturer. The company has taken full advantage of the Hainan FTP's various preferential policies, boosting its transformation and expansion. According to Wang, these tax benefits have saved the company over 10 million yuan ($1.4 million), with the funds reinvested into R&D and brand building. “Going forward, we plan to make full use of Hainan’s tax incentives to further lower production costs and enhance the overall competitiveness of our products,” he added.

Since the launch of the Master Plan five years ago, a series of policies centered on the "dual 15%" income tax cap for enterprises and individuals have laid a solid foundation for attracting both businesses and talent to the province.

According to official statistics, by the end of December 2024, nearly 4,300 enterprises in Hainan had benefited from the 15% corporate income tax policy. Working in tandem with other preferential policies, the incentive has helped direct the flow of talents, goods, and capital into Hainan, playing a pivotal role in driving regional socioeconomic growth.

On the individual level, high-caliber, in-demand professionals working in the Hainan FTP are exempt from paying individual income tax on the portion of their earnings that exceeds an effective tax rate of 15%. More than 39,000 people had benefited from this policy as of the end of 2024. Combined with other talent-focused measures, the policy has helped attract over 850,000 professionals to Hainan, injecting strong momentum into the construction of a high-standard free trade port with Chinese characteristics.