Tax and Financial Arrangements in the Construction of Hainan Free Trade Port
The construction of Hainan Free Trade Port involves many aspects，such as reform and opening-up，ecological civilization，international tourism consumption，and major national strategic services. In specific areas of economic development and social governance，it also covers policies，the rule of law，and the business environment. It is a major and complex social construction project.
As the Hainan Free Trade Port is set to close in 2025，specific measures for its construction are being continuously refined and implemented. As the term "free trade port" indicates， the essential focus is trading. The construction of a free trade port will be based on free and convenient international trade，forming a policy and institutional system with a focus on trade freedom and convenience. Another major focus of a free trade port is "freedom". Specifically，the freedom of Hainan Free Trade Port will be implemented in achieving free and convenient trade，investment，cross-border capital flow，personnel entry and exit，and transportation.
Characteristics of Tax and Financial Arrangements in World Free Trade Ports
Looking at the global free trade ports that have been built，such as China’s Hong Kong (hereinafter referred to as Hong Kong)，Singapore，Dubai，and Rotterdam，these free trade ports not only serve as logistics and capital distribution centers for international trade，but also have relatively favorable tax systems and strong financial support. The business development of investment entities in the free trade port requires sufficient financial support to enable them to raise funds，while also retaining more profits for the company. These are two aspects that market entities are most concerned about. From another perspective，the construction of a free trade port cannot be achieved without competitive tax arrangements，comprehensive and thoughtful financial services，and even if the location of the free trade ports itself is one of the world's financial centers.
The tax incentives of world-renowned free trade ports are evident to all. Taking Hong Kong and Singapore as examples，the corporate income tax rates in the two regions are 16.5% and 17% respectively,while that in mainland China stands at 25%. The respective personal income tax rates in Hong Kong and Singapore are 15% and 22%,while that in mainland China could reach 45%. Regarding value-added tax，Hong Kong does not impose any value-added tax，while Singapore charges a value-added tax rate of 8%. In mainland China，the value-added tax rate varies for different industries and ranges from 6% to 13%. .
Most of the established free trade ports are also world financial centers. The established free trade ports such as Singapore，Hong Kong，Dubai and Rotterdam (not for Rotterdam itself，but for the nearby Amsterdam) ranked third，fourth，twenty second and sixteenth respectively in the latest Global Financial Centers Index (GFCI). While the Free Trade Port is also one of the world's financial centers，it has a deep foundation in various aspects of the financial field，such as the banking industry，investment management，insurance，fintech，and financial market transactions. This can provide investors in the Free Trade Port with sufficient cross-border settlement，investment and financing，and other comprehensive financial services. Convenient and comprehensive financial services can further promote the development of the local trade center，enabling it to better play the role as a free trade port. It can be seen that the highly developed financial industry will be very conducive to the construction and development of free trade ports，which has been proven by the construction of free trade ports around the world.
The Main Measures Taken by Hainan Free Trade Port in Terms of Taxation
Tax policy is an important consideration for startups and large enterprises when deciding on a location，and the tax system is also an important component of a local business environment. Hainan is making great efforts in the construction of tax system. Currently，based on the principles of zero tariffs，low tax rates，simplified tax system，strong rule of law，and phased implementation，a tax system suitable for high-level free trade ports is gradually established.
Zero tariffs are a fundamental feature of global free trade ports，and Hainan is no exception. In terms of implementing of zero tariffs，it will be divided into two stages. Firstly，before the operation of the island wide customs lockdown in 2025，some imported goods will be exempt from import tariffs，import value-added tax，and consumption tax. Secondly，after the implementation of the island wide customs closure operation and the simplification of the tax system in 2025，all goods that are not included in the list of imported taxable goods and are allowed to be imported from Hainan Free Trade Port will be exempt from import tariffs.Under the framework of zero tariff principles，the most influential and potential tax arrangement in Hainan has been formed，which is the policy of exemption from import tariffs for goods with a value-added of over 30% (including) entering the mainland. This tax arrangement is currently unique nationwide.
Low tax rate is another important arrangement for attracting investment in Hainan Free Trade Port. For example，Hainan's well-known "double 15%" income tax rate，which attracts investors，is a manifestation of Hainan Free Trade Port's low tax rate preferential tax policy. The "double 15%" policy indicates that only industrial enterprises registered in Hainan Free Trade Port and engaged in substantive operations will enjoy a 15% reduction in corporate income tax until 2025，while all enterprises registered in the port and operating substantively outside the negative list industries will benefit from the same tax cut until 2035. Furthermore，individuals who reside in Hainan Free Trade Port for at least 183 days in a taxation year will be subject to individual income tax at three progressive rates of 3%，10%，and 15%，on their comprehensive and business income derived from the port. These tax rates are significantly lower compared to the current 25% tax rate in the mainland