A view of the Headquarters Economic Zone of Haikou Jiangdong New Area, Hainan province. [Photo/VCG]

Purpose

In an effort to bolster the construction of the Hainan Free Trade Port, Hainan has introduced a comprehensive set of measures designed to promote the high-quality development of the province's headquarters economy. These measures are geared toward attracting global capital and innovative resources, as well as fostering the growth of key industrial clusters such as tourism, modern services, high technology, and high-efficiency tropical agriculture within the region.

Definitions

Headquarters enterprises: the main offices that perform substantive management and service functions for enterprises within a certain region, including newly established headquarters and existing headquarters.

Newly established headquarters: headquarters enterprises recognized after the issuance of the measures.

Existing headquarters: headquarters enterprises recognized before the issuance of the measures and still in operation.

Types of headquarters enterprises

Headquarters enterprises are classified into regional headquarters of multinational corporations, large enterprise headquarters, comprehensive headquarters, functional headquarters and high-growth headquarters.

Following the principles of "classified identification and hierarchical management", the Hainan Free Trade Port Joint Conference Office for Investment Promotion and Headquarters Economic Development (hereinafter referred to as the Provincial Joint Office) implements the management of headquarters enterprise identification. Cities and counties establish corresponding institutions to fulfill their respective management functions.

Regional headquarters of multinational corporations

Large enterprise headquarters

Comprehensive headquarters

Functional headquarters

High-growth headquarters

Standards and procedures for recognition

(1) Qualifications for regional headquarters of multinational corporations:

Foreign-invested enterprises established in Hainan by overseas-registered parent companies, possessing independent legal person status;

The paid-in registered capital must be at least $2 million;

The overseas parent company must hold at least 50 percent of the direct equity, and its total assets must be valued at no less than $200 million;

The parent company must operate at least three enterprises, either within or outside China;

(2) Qualifications for a large enterprise headquarters:

Enterprises registered and established in Hainan, possessing independent legal person status;

The parent company’s total assets must be no less than 2 billion yuan ($280 million);

The enterprise must hold controlling stakes in at least three other enterprises nationwide, including at least one outside the province;

The enterprise's annual revenue must be no less than 1 billion yuan for the year prior to or the year of application, contributing at least 35 million yuan to local finances;

An enterprise with an independent legal person established and registered in the province, which meets one of the following conditions, can be directly recognized as the headquarters of a large enterprise headquarters:

Listed on the main boards of the Shanghai Stock Exchange or the Shenzhen Stock Exchange;

Recognized as a secondary or regional headquarters by the State or central departments;

Headquarters or regional headquarters of Fortune 500 companies, top 500 Chinese companies, and top 500 private companies established in Hainan;

(3) Qualifications for applying for the comprehensive headquarters:

Enterprises registered and established in Hainan, possessing independent legal person status;

The annual revenue in the year prior to or the year of application must be no less than 500 million yuan, contributing at least 20 million yuan to local finances;

The enterprise in Hainan is required to undertake one or more operational functions such as product procurement, sales and settlement, production, research and development, product sales, as well as services and service trade within China, the Asia-Pacific or a broader area;

(4) Qualifications for applying for functional headquarters:

Enterprises registered and established in Hainan, possessing independent legal person status;

The annual revenue in the year prior to or the year of application must be no less than 500 million yuan, contributing at least 10 million yuan to local finances;

The enterprise is required to engage in one or more of the following national or regional functions: procurement, sales, logistics, distribution, settlement, management, R&D, legal consulting or human resources;

(5) Qualifications for applying for a high-growth headquarters:

Enterprises registered and established in Hainan, possessing independent legal person status;

The contribution to local finances in the year prior to or the year of application must be no less than 8 million yuan;

The enterprise is required to have intellectual property rights in core technologies (either developed independently or authorized) in its field of business, with R&D expenses (based on audited financial statements) no less than 5 percent of annual revenue; or have at least received Series C funding from a private equity investment company;

The enterprise is required to have a dedicated R&D team, institution or center.

Online application platform 

https://wssp.hainan.gov.cn/investinhainan/ptfw/index

Hainan's One-stop service for investment offers headquarters enterprises a range of one-stop services, including consultation, policy interpretation, and recognition management. Enterprises are required to seek recognition for various types of headquarters enterprises through the streamlined platform.

For more information, please click this link: https://wssp.hainan.gov.cn/investinhainan/

Recognition application process

To apply for the recognition of regional headquarters of multinational corporations and large enterprise headquarters, the process begins with an initial review by the local government of the city (county) where the enterprise is located. This is followed by a submission to the Provincial Joint Office for review, and if the application passes the reviews, recognition is granted.

For the recognition of comprehensive headquarters, functional headquarters and high-growth headquarters, the local government of the city (county) where the enterprise is located carries out the recognition process. After recognition, the information is reported to the Provincial Joint Office for record-keeping.

Supporting policies

Financial incentives

Within five years after an enterprise is recognized as a headquarters enterprise, the local city (county) government will provide certain financial incentives annually based on the comprehensive contribution of the enterprise. The local city (county) government will also conduct annual reviews of the headquarters enterprises, and only those meeting the standards will be eligible for financial incentives.

Incentives for enterprises' capacity upgrading

The incentives aim to encourage newly established and existing headquarters to upgrade their capacities to meet the standards for recognition as regional headquarters of multinational corporations or large enterprises. Upon meeting the standards, they can be re-recognized (as an upgraded type of headquarters) and will receive enhanced rewards based on the new headquarters type from the year of recognition, but the old rewards will be revoked.

Land use support for headquarters enterprises

After being recognized as a headquarters enterprise, the local city (county) government will support eligible projects in applying for inclusion in the provincial key projects and provide land use guarantees.

Eligibility for small passenger vehicle quota

Regional headquarters of multinational corporations and large enterprise headquarters are eligible to apply for quotas of 10 small passenger vehicles. Comprehensive headquarters, functional headquarters and high-growth headquarters are entitled to apply for quotas of six small passenger vehicles.

Credit fund support

Financial institutions are encouraged to use policy tools such as financing guarantees, loan interest subsidies and risk compensation to provide credit fund support to headquarters enterprises.

Preferential services for talents at headquarters enterprises

Talents at headquarters enterprises, including those coming with the enterprises and newly recruited talents (collectively referred to as headquarters enterprise talents), will enjoy preferential services according to existing relevant policies after being recognized and recorded by the province.

Enhancing policy support

Local city (county) governments should strengthen policy support for headquarters enterprises. For newly introduced key headquarters enterprises, the government can adopt a "case-by-case" approach to provide targeted support.

Application materials

Enterprises applying for the recognition of headquarters enterprise qualification should submit the following materials:

An application letter signed by the company’s legal representative;

The Hainan headquarters enterprise recognition application form;

Detailed materials submitted in accordance with the Hainan headquarters enterprise recognition application materials checklist；

Supervision and management

The Hainan Free Trade Port Joint Conference for Investment Promotion and Headquarters Economic Development, or Provincial Joint Conference for short, is responsible for guiding and supervising the recognition and management of headquarters enterprises, as well as making decisions on major issues within the recognition and management process. The Provincial Joint Office, located in the Hainan Provincial Department of Commerce, is responsible for the daily tasks of headquarters enterprise recognition and management. The local city (county) government serves as the main body for promoting the development of the headquarters economy, responsible for such issues as consulting services for headquarters enterprises, application acceptance, verification and recognition, supervision during and after the process, and the building of the headquarters economic management team.

The local city (county)  government will conduct an annual review ofThe local city (county)  government will conduct an annual review of headquarters enterprises in the first half of each year (in accordance with the recognition standards outlined in the measures) and report the review results to the Provincial Joint Office. Headquarters enterprises recognized before the implementation may choose to be reviewed according to the newly released measures or The Hainan Province Headquarters Enterprise Recognition Management Measures released in 2018. If any of the following situations are found, the headquarters enterprise qualification will be canceled, and the preferential policies will be terminated: headquarters enterprises in the first half of each year (in accordance with the recognition standards outlined in the measures) and report the review results to the Provincial Joint Office. Headquarters enterprises recognized before the implementation may choose to be reviewed according to the newly released measures or The Hainan Province Headquarters Enterprise Recognition Management Measures released in 2018. If any of the following situations are found, the headquarters enterprise qualification will be canceled, and the preferential policies will be terminated:

1. The enterprise obtained qualification recognition by concealing the truth or providing false materials;

2. Without special reasons, the enterprise ceases operations and files for suspension with the registration authority before completing 10 years of business, or cancels tax registration and moves outside the province, or relocates its actual operations outside the province;

3. The enterprise fails to pass the review for two consecutive years;

4. Any other serious violations of national laws and regulations.

Headquarters enterprises that have had their qualification revoked are not allowed to reapply within five years from the date of revocation;

Upon recognition as a headquarters enterprise, the enterprise must promptly inform the city (county) commerce departments of its addition of new branches or subsidiaries in Hainan with a holding of over 50 percent, to ensure proper statistical inclusion;

Enterprises that fraudulently obtain incentive funds and enjoy other support policies through illegal or improper methods will have their headquarters qualification revoked and all preferential policies terminated upon verification. The enterprises will be required to return the received incentives, and their dishonest behavior will be recorded in accordance with relevant legal documents and disclosed on the Hainan Free Trade Port Credit Information Sharing Platform in accordance with laws and regulations. Criminal cases will be dealt with by judicial authorities according to law.

Supplementary provisions

The operating revenue of headquarters enterprises does not include income related to real estate development and operation. The statistical scope includes the headquarters enterprise and its branches and subsidiaries within Hainan in which it holds a stake of more than 50 percent. If both the parent company and the subsidiary apply for headquarters enterprise status, the operating revenue should not be double-counted;

The calculation of local fiscal contributions of headquarters enterprises includes the total actual annual tax payments retained locally, excluding individual income tax, deed tax, land appreciation tax, and other taxes related to real estate development and operation. The statistical scope includes the headquarters enterprise and its branches and subsidiaries within the province in which it holds a stake of more than 50 percent (exclusive). If both the parent company and the subsidiary apply for headquarters enterprise status, the local fiscal contributions should not be double-counted;

The operating revenue of headquarters enterprises shall be calculated according to the enterprise income tax annual declaration form; the tax contributions of headquarters enterprises shall be calculated based on the tax payment certificates submitted by the enterprises;

The comprehensive contribution referred to in the measures includes the enterprise’s contributions to local economic development, technological innovation, employment, energy conservation and emission reduction, social integrity, and safe production;

After being recognized as a headquarters enterprise, if the enterprise changes its address or main place of business within the province, it will continue to enjoy headquarters enterprise incentives for the remaining period;

Headquarters enterprises can apply for other incentives formulated by Hainan. If such incentives are similar to those stipulated in the measures, the incentives with the higher benefit shall prevail;

Relevant provincial departments will update and improve related supporting policies for the headquarters economy in accordance with the measures;

Haikou, Sanya and Danzhou are encouraged to build headquarters economic clusters. Other cities (counties) can formulate policies to support the development of the headquarters economy based on their realities, and implement them after filing with the Provincial Joint Office;

The measures do not apply to enterprises included in Hainan's Prohibited and Restricted Directory for Industry Access and real estate enterprises;

Existing regional headquarters of multinational corporations, comprehensive (regional) headquarters and high-growth headquarters correspond to the regional headquarters of multinational corporations, comprehensive headquarters, and high-growth headquarters specified in the measures, respectively;

The measures take effect from the date of issuance and remain valid for five years. The Provincial Joint Office is responsible for the interpretation of the measures. In the event of any inconsistency between previous regulations and the measures, the measures shall prevail.


Note: The English version is for reference only. In case of any discrepancies, the Chinese version shall prevail.


Source: dofcom.hainan.gov.cn