Hainan issues free trade port overseas investment guide

The Hainan Free Trade Port Overseas Investment Promotion Guide, compiled by the Hainan Provincial Department of Commerce, was recently released. It analyzes Hainan’s FTP policies, shows policy application scenarios using examples, and provides guidance for commercial entities in Hainan to engage in overseas investment.

The guide is divided into four parts: "Why Hainan", "Investment Form and Approval/Filing Process", "Tax Exemption for Overseas Direct Investment Income in Three Industries", and "Example Reference".

The guide is expected to be of great use to enterprises legally established in China that own non-financial enterprises or acquire ownership, control, management and other rights and interests of existing non-financial enterprises overseas through newly set up ventures, mergers and acquisitions, and other means.

The Overall Plan for the Construction of Hainan Free Trade Port states that enterprises in the tourism, modern service and high-tech industries that have been set up in the Hainan FTP can be exempted from corporate income tax on income derived from new overseas direct investment before 2025. The guide covers important information related to tax exemption including legal conditions and examples of various scenarios.

Enterprises in Hainan have already been benefiting from a preferential policy of "exemption of enterprise income tax on new overseas direct investment". The guide introduces some examples. For instance, a gaming company that engaged in overseas investment saved 47.5 million yuan ($6.8 million) of corporate income tax as a direct result of this policy.

Phoenix Island in Sanya, Hainan. [Photo/IC]