Notice from Ministry of Finance on pilot duty-free policy in Hainan

Updated: 2011-05-31

Notice of the Ministry of Finance of PRC ([2011]14)

To speed up construction and development of international tourism on Hainan Island, the State Council has decided to carry out the pilot policy for the offshore passenger to engage in duty-free shopping in Hainan province (hereinafter referred to as the offshore duty-free policy). The offshore duty-free policy refers to the preferential tax policy made for tourists leaving the island by plane (tourists leaving the country are not included here) to enjoy import duty-free shopping within a limited number of times, values, quantities, and categories, pay at the offshore duty-free store (abbreviated below as DFS) and take delivery of the goods at the point of delivery within the quarantine zone. After consultation with the Ministry of Commerce, the General Administration of Customs, and the State Administration of Taxation, the Ministry of Finance announced the relevant matters involved in the pilot work as follows:

I. Application groups and conditions

(a) Application groups

The offshore duty-free policy applies to domestic and foreign visitors, including residents of Hainan province, aged 18 or older, aboard any flight to leave Hainan Island but not China.

(b) Applicable conditions

The offshore passengers who enjoy the duty-free shopping policy must fit well in the following three conditions:

(1) Having purchased the offshore tickets and holding effective ID cards, domestic passengers holding identity cards (passengers from Hong Kong, Macao, and Taiwan holding effective travel documents), overseas passenger holding passports;

(2) Doing duty-free shopping and making the payment in the designated DSF, within the limits in number of times, values, quantities, and categories prescribed by the government, with the shopping license in accordance with the governmental stipulations;

(3) Picking up duty-free goods by providing a valid identity card, shipping documents, and boarding passes at the pick-up counters within the quarantine zone, and the goods must be carried by the passengers themselves leaving the island by air.

II. Offshore duty-free store, variety of duty-free goods, and duty-free categories

(a) Offshore duty-free stores

“Offshore duty-free stores” refer to those stores implementing the offshore duty-free policy and franchise. An offshore duty-free store was set up in separately in Haikou and Sanya to test the policy. The Sanya store was additionally given the offshore duty-free policy on the basis of the outbound duty-free store in the city originally approved by the government, which will be opened to test the policy as soon as this notice starts from the date of implementation. The Haikou’s duty-free store will be launched for trial after its business entity, site selection and related supporting facilities are to be confirmed and approved by the relevant authorities.

(b) Variety of duty-free goods

Duty-free products designated as import products during the trial period are as follows: jewelry, crafts, watches, perfume, cosmetics, glasses (containing sunglasses), silk towel, tie, woolens, cotton textiles, clothing accessories, shoes and caps, leather belts, bags, small leather items, candy and sweets, and sports supplies. The policy does not apply to those prohibited from importing by the government or some twenty categories of products that have been declared not exempt from duties.

(c) Duty-free categories

The categories of taxes stipulated by the offshore duty-free policy involve customs duties, import value-added duties, and consumption duties.

III. Number, amount and quantity of duty-free shopping

(a) Number of times for the offshore duty-free shopping

Visitors who do not reside on the island can enjoy the offshore duty-free shopping policy twice per person per year. Residents of Hainan can enjoy the policy only one time per person a year. It is regarded as one duty-free shopping trip if visitors leave the island after a purchase. The status of Hainan residents will be identified by the ID card.

(b) Amount and quantity of duty-free shopping

Offshore visitors (including visitors residing on the island) are tentatively allowed to spend less than RMB 5,000 yuan on each duty-free shopping visit per person. The annex to The Pilot Announcement for the Duty-Free Shopping Policy on Hainan Island provides the amount and range of the duty-free goods. In addition, each tourist is allowed to buy one article worth more than RMB 5,000 yuan per unit if he or she has paid import duties for imported goods in full payment.

IV Shopping procedure

Eligible tourists who buy offshore duty-free commodities should follow four steps. First, tourists must buy the import duty-free goods in a duty-free store under the supervision of Customs. Second, offshore tourists must pay for their purchase inside the duty-free store. Third, the tourist must wait for the duty-free store to deliver the purchased goods to airport pick-up counters according to the tourist's departure time and destination. Fourth, tourists must take possession of the goods at the pick-up counters within the airport’s quarantine zone.

The regulatory measures governing the offshore duty-free pilot policy will be announced by the General Administration of Customs.

This notice is hereby published by the Ministry of Finance and will come into force starting April 20, 2011.

Notice is hereby released.

Ministry of Finance

March 16, 2011