What's new with Hainan FTP's processing value-added duty exemption policy after Dec 18, 2025?

en.hainan.gov.cn

Updated: 2026-03-11

Q: With the launch of island-wide special customs operations in the Hainan Free Trade Port on Dec 18, 2025, the processing value-added duty exemption policy has undergone a comprehensive upgrade. What are the key changes — and what benefits do they bring to domestic and foreign enterprises?

A: The upgrade can be summarized as lower threshold, broader scope, smarter formula, and greater benefits. Here are some of the changes:

Lower barrier for enterprises
Previously, businesses were required to derive at least 60 percent of total revenue from industries listed in the "encouraged industries" category. This requirement has now been abolished, allowing a much wider range of businesses legally operating within the Hainan FTP to qualify.

Broader coverage of import materials
Previously, only bonded goods were covered. Now, zero-tariff imported goods are also included — creating a powerful double benefit by combining the processing value-added exemption with zero-tariff import policies. This gives enterprises greater flexibility in global sourcing.

Smarter formula to encourage local production
The value of goods locally produced or sourced within Hainan now adds up to the total value-added calculation. This incentivizes businesses to deepen their local procurements and manufacturing — fostering a "Made in Hainan" ecosystem and strengthening the competitiveness of local supply chains.

Supply chain collaboration now more rewarding
Previously, the value-added total was calculated per individual business, each to their own. Now, value added across multiple enterprises for successive processing of the same products along a supply chain can be calculated cumulatively. It enables large, medium-sized and small businesses to collectively benefit from the policy and drive the development of integrated industrial clusters in Hainan.

Source: Official news conference of the Hainan delegation to the fourth session of the 14th National People's Congress, March 7, 2026.