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Hainan Free Trade Port

Hainan Province, an island at the southernmost point of China is best known for its sandy beaches and resort-lined coast. On June 1, 2020, Chinese authorities released the Overall Plan for the Construction of Hainan Free Trade Port (“the Masterplan”), a large-scale plan to transform the entire island province into a free trade port (FTP) – making it the largest special economic zone in China.

Corporation China offers a complete range of company registration, accounting, legal, and business services, providing a complete one-stop solution for starting, maintaining, and managing a business in Hainan Free Trade Zone.e.

Setting up a company in the Hainan Free Trade Port

At Corporation China, we specialize in helping foreigners set up companies through a safe and secure process. With our legal and consulting staff, we have assisted in setting up  companies in Hainan, who have decades of collective experience in company registration and legal affairs. Please contact us for a free consultation.

Hainan Free Trade Zone already provides complete support for investors interested in starting companies in this part of China. There are plenty of tax incentives, relaxed investment policies, a wide range of advantageous economic services, a favorable ecological environment, and many more. Here are some benefits to consider when opening a company in Hainan FTZ:

 

1. Obtaining the needed special licenses and permits in a fast manner (electronic licenses are permitted);

2. The incorporation of companies without harsh formalities;

3. Complete support for financial trading and operations;

4. A series of tax incentives and exemptions offered to foreign entrepreneurs.

Domestic and foreign entrepreneurs interested in opening a company in Hainan Free Trade Zone can talk to our specialists for support. Corporation China can help international investors start a WFOE, or the Wholly Foreign-Owned Enterprise, the proper business structure available.

Advantage of A Company in Hainan FTP

1. Free trade port, more advanced open form

The free trade port is a standard form of international cooperation. The ” inside the territory while outside the customs” practice free flow, including the free flow of goods and funds. Similar to Singapore and Hong Kong, China, is a more advanced form of openness. 

2. Central government’s strong policy support for Hainan Free Trade Island

In order to implement the national strategy for Hainan Free Trade Zone construction, the Hainan Provincial Party Committee and the Provincial Government decided to establish the Haikou Jiangdong New District as a centralized exhibition area for the construction of the China (Hainan) Free Trade Zone. In addition, Sanya will become an innovative financial hub in the Hainan Free Trade Zone. Operational activities that are restricted to foreign-funded enterprises are more open on this side, such as finance. The 100-day investment promotion activity in Hainan attracted many enterprises to indicate their presence in Hainan.

3.The Hainan Medical Tourism Zone

The Hainan medical tourism zone will provide comprehensive medical services as well as a green medical convalescence environment to attract domestic and foreign tourists.The zone is seeking commercial investment and cooperation with foreign institutions, including international hospitals, third-party testing institutions and laboratories, medical colleges, pension insurance companies, and medical tourism institutions.

4. Geographical advantage

Hainan has currently opened 44 international air routes and 370 domestic ones. It can reach Vietnam, Hong Kong, Macau, and the Pearl River Delta region in 1 hour, and can reach the Philippines, Brunei, Thailand, Myanmar, Laos, Cambodia, and China in 2 hours. In the triangle area, it can reach Singapore, Malaysia, Indonesia, India, South Korea, Japan, and the Bohai Rim area within 3 hours. Major commercial cities in Southeast Asia are within a 4-5 hour voyage with convenient transportation and excellent geographical location.

Hainan FTP New Preferential Policies

On June 30, 2020, the Ministry of Finance and the State Taxation Administration (STA) released the Circular about Preferential Corporate Income Tax Policy for Hainan FTP and the Circular about Individual Income Tax Policy for High-End and Urgently Needed Talents at Hainan FTP. These two circulars contain preferential policies and incentive schemes that are applicable from January 1, 2020 to December 31, 2024.

 

According to the Cai Shui [2020] No.31, enterprises registered in the Hainan Free Trade Port will get a chance to enjoy the following three major corporate income tax relaxations:

 Reduced Tax Rate

Enterprises which in encouraged industries and engaging in substantive operations are entitled to corporate income tax at a reduced tax rate of 15 percent;

Income Tax Exempted

Income from new overseas direct investment derived by enterprises in the tourism, modern service, and high-tech industry may be exempted from corporate income tax


 Pre-Tax Deduction 

Eligible capital expenditures can be allowed one-off pre-tax deductions or accelerated depreciation and amortization.

Application of preferential corporate tax policies

Lowered corporate income tax rate of 15 percent

Currently, the statutory CIT rate in China is 25 percent. However, enterprises may enjoy a favorable CIT rate of 15 percent in Hainan, if they meet the following three criteria:

  1. The enterprise is registered in the Hainan FTP;
  2. The enterprise has substantive operations in the Hainan FTP;
  3. The primary business of the enterprise is in the list of encouraged industries in the Hainan FTP.

Note: To determine whether certain business falls under the encouraged industries in Hainan FTP, investors can refer to the Guiding Catalogue for Industrial Structure Adjustment (2019 Edition), the Catalogue of Encouraged Industries for Foreign Investment (2019 Edition), and the catalogue of encouraged industries newly added in Hainan FTP (to be announced).

 

Tax exemption on overseas income

The statutory CIT rate on income from overseas direct investment of enterprises in China is currently 25 percent. But in Hainan, the CIT is exempt on such overseas income, if the following criteria are met:

  1. The income is derived by companies in the tourism, modern service, and high-tech sectors included in the encouraged industries in Hainan FTP;
  2. The income is from newly increased overseas direct investment.
  3. The overseas income is the operational revenue of newly established overseas branches, or dividend income corresponding to the new direct investment obtained from the overseas subsidiaries with a 20 percent plus (inclusive) equity held by the parent company;
  4. The statutory CIT rate of the invested country or region is not less than 5 percent.

Note: Income from equity transfer or overseas income from tax havens cannot enjoy the tax exemption.

 

One-off pre-tax deduction or accelerated depreciation and amortization for newly purchased assets

For an enterprise established in Hainan FTP newly purchased fixed assets or intangible assets, if the unit value of the new assets exceeds RMB 5 million (US$70.9 million), the depreciation or amortization period can be shortened, or the accelerated depreciation or amortization method can be adopted. These would reduce the current tax burden of enterprises, increase their cash flow, and encourage them to upgrade their equipment and technology in time.

Note: The newly purchased fixed assets and intangible assets include those assets that are self-constructed and self-developed but exclude houses and buildings.

Application of preferential individual income tax policies

Currently, individual income tax in China is levied at a progressive rate, ranging from three percent to 45 percent with seven tax brackets. From now on, according to Cai Shui [2020] No.32, for high-end talents and talents in short supply working at Hainan FTP, the portion of their actual IIT burden exceeding 15 percent will be exempted. This preferential tax system is expected to attract many enterprises or the relocation of businesses in encouraged industries.

The following types of income sourced from Hainan FTP will be eligible:

  1. Comprehensive income, such as wages and salaries, remuneration for labor services, author’s remuneration, and income from royalties;
  2. Operation income;
  3. Talent subsidy income recognized by Hainan Province.

Note: Income from investment, such as dividends and bonuses, and income from property transfer, such as equity and real estate transfer, are not to be included.

A list of professions that qualify as high-end talent and talent in short supply who can enjoy the aforesaid preferential policies and specific administrative measures will be formulated by Hainan Province in consultation with the MOF and the STA.

 

Application of preferential corporate tax policies

Application of preferential corporate tax policies

Application of preferential corporate tax policies

 

Company Registration Packages

Communicate your business goals with Corporation China consultants. We have the licensed Legal Team execute their professional services at a reasonable price.

 

Tailored and flexible solutions

  • Transparent and cost-effective pricing

  • Clear English communication

  • Licensed and experienced Legal Team

  • Safe & secure business structures

  • Fast processing times

  • International standards

 

We create company registration packages that offer a flexible, customized and complete solution for all corporate requirements. All our packages include:

Package options

  • Corporate registration
  • Foreign business license
  • Corporate bank account
  • Work permit & visa
  • Tax & VAT registration
  • Social fund registration
  • Business licenses
  • Registered address
  • Accounting & audit
  • Director services
  • Shareholder services
  • Compliance & administration
  • Domain registration
  • Trademarks & IP

Business structures

  • Export/ Import
  • Manufacturing
  • Trading
  • Consulting
  • Tourism
  • Property/holding
  • Registered partnership
  • Sole proprietor
  • Representative office
  • Regional operating HQ

Options for registering a Hainan company with 100% foreign ownership.

Wholly-Foreign Owned Enterprise

 A company is allowed to apply for a foreign business license through its demonstration of providing benefits to the country through technology, intellectual property sharing, investment, and/or employment.

Representative, branch, regional (HQ) office

Supplementary corporate registration for foreign companies is available. Each type conducts specific constraints on both its operations and generation of profit.

Joint Venture

Limited liability company formed between  Chinese investors and foreign investors. The parties agree to create an entity by both contributing equities, and they then share in the revenues, expenses, and control of the enterprise. JV has usually been used by foreign investors to engage the so-called restricted in areas such as Education, Mining, Hospital, etc.

Trading company

A Trading Company designed for Expanding your sourcing platform, direct control of logistics and quality control, and, finally yet importantly, purchase for reselling products overseas. Import of goods to sell directly, either in wholesale or retail in China.

 Consulting Company

A China Consulting Company is a commonly used investment vehicle for mainland China-based businesses. It is designed for businesses dealing with consulting and can be used for China IT consulting or Educational consulting type business. The registration of a China Company takes about 30 working days to be done.

Manufacturing company

China is the world’s largest manufacturer, and its labor costs are still low relative to that of most western countries.  Hence, it is an ideal location to manufacture products that require high labor or a vast scale.

Opening Bank  Account

 

The Hainan Free Trade Account is a convertible accounting system with RMB as its base currency, using unified accounting rules and taking into account types of different risk management between the RMB and foreign currencies. A FTA (Free Trade Account) allows foreign corporation or individual in Free Trade Port to conduct transactions with corporations within the Free Trade Port / overseas / within Chinese border but out of FTZ with only one account. It releases the account owner from foreign exchange swaps between several different accounts for both offshore and cross-border transactions. The process for opening a Free Trade Account in Hainan has become considerably easier after the establishment of Free Trade Port.

Company startup costs and fees.

Fees will vary based on the type of corporate structure and the overall scope of the legal work. We believe in transparent and reasonable pricing. Our corporate legal fees are mostly based on an itemized basis with the complete costs quoted prior to beginning the legal work. We assemble a comprehensive breakdown and analysis with the relevant government fees. We do not add any unnecessary fees after the fact. The costs which are associated with the formation will include: costs for the registration of the company capitalization, certification of documents, registration of memorandum, application for social fund, corporate licensing, work permit and visa. Our legal and accounting Professionals are ready to discuss your business needs, and answer any questions you may have.

Supporting services for company setup

Every company must eventually undergo minor to major changes in its structure. These changes must be properly reported to the relevant authorities. Hence beyond company registration, we could further offer services for Company Bank Account Opening, Tax & Accounting Support, Full Back Office Support, Tax Invoice (Fapiao Machine) Registration, China Payroll Service, China Work Visa Application etc. .

Not sure where to begin?

Get a free 30-minute consultation on starting and operating your company in Thailand.

Grace, Legal business services coordinator

CONNECT 

 

CONTACT

 

info@corporationchina.com

+86 021 5102 1891 (CN)
+1 253 777 0117 (US)
+44 (0) 20 8133 7773 (UK)
+61(0) 2 8006 1867 (AU)
+911166482160 (IN)
+852 8191 0881 (HK)
+ 7 (499) 5770299 (RU)
+ 27 110 839337 (RSA)

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Location

580 West Nanjing Road, office 3506, 35th Floor LL Land Building Jing’an, Shanghai

 

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