The Hainan FTP’s two highly effective 15% income tax policies

Since the release of the master plan for the Hainan Free Trade Port, Hainan has made every effort to implement the policies planned for the initial period of the FTP. A number of core policies have now been implemented, including two “15% income tax policies”, which have been highly effective in attracting market entities and talented staff, according to the Office of the Reform Deepening Committee of  CPC Hainan Provincial Committee.

On June 30, 2020, the Hainan Provincial Department of Finance and the Hainan Provincial Taxation Bureau of State Administration of Taxation released two documents, the “Notice on the Hainan Free Trade Port’s Preferential Policies on Corporate Income Tax” and the “Notice on the Hainan Free Trade Port’s Personal Income Tax Policy for High-end Talents and Urgently-needed Talents”. According to these policies, high-end talents and urgently-needed talents working in the Hainan Free Trade Port are entitled to a personal income tax rate of 15% no matter their nationality. For encouraged industries, companies registered in the Hainan Free Trade Port with a practical operational record are entitled to a reduced corporate tax rate of 15%. These policies were implemented on January 1, 2020 and will remain in effect through December 31, 2024.

These two 15% preferential policies for corporate and personal income tax are highly significant policies of the Hainan Free Trade Port. Their quick implementation has been highly effective in attracting market entities and talented staff. From June 2020 to July 2021, there were 470,000 newly registered market entities, including 215,000 new corporations. From January 2021 to July 2021, Hainan added a total of 233,400 new market entities, including 92,700 corporations, an increase of 43.47% over the same period of the previous year. By the end of July this year, there were 1.38 million market entities in the province, an increase of 30.35% over the same period of 2020, including 515,000 corporations and 865,000 individual business.

From the release of the master plan for the Hainan Free Trade Port on June 1 2020 to May 31 2021, Hainan has attracted more than 110,000 talents, an increase of 1,730% over the same period of the previous year. The proportion of talented workers in the total population has risen to 19.97%. Hainan has introduced a total of 208,000 talents of all types since April 13, 2018. Since the the release of the Master Plan for the Hainan Free Trade Port, the number of talents brought into Hainan is over 60% of the total brought in during the entire previous three years, reaching 168,000, an increase of 425% year on year. With these excellent figures, Hainan has and successfully accomplished the initial goal of the "bringing millions of talents to Hainan" action plan.