Enterprises registered in and have substantial operations within one of the encouraged industries in the Hainan Free Trade Port may enjoy a reduced CIT rate of 15%. The current standard CIT rate in China is 25%.

Eligible enterprises shall mainly engage in the industries specified in the Encouraged Industries Catalogue of the Hainan Free Trade Port and their main business income shall account for 60% or above of their total revenue.

Substantial operation means that the effective management of the enterprise is physically in the Hainan Free Trade Port and exercises substantive and overall management and control on business, personnel, accounting, and properties, etc. If an enterprise is registered in the Hainan Free Trade Port only, whose production and operation, personnel, accounting, or properties etc. are not in the Hainan Free Trade Port, it will not be considered to have substantial operations in the Hainan Free Trade Port and thus cannot enjoy the reduced CIT rate of 15%.

The portion of IIT burden exceeding 15% for high-end and urgently needed talents working in the Hainan Free Trade Port will be exempted. The eligible income includes the comprehensive income derived from the Hainan Free Trade Port (including wages and salaries, labor remuneration, royalties, and franchise royalties), business income, and talent subsidy income recognized by Hainan Province.

Eligible individuals may claim the above benefits when handling their annual IIT settlement in Hainan Province. Hainan will list and manage eligible talents accordingly, as stipulated by measures jointly formulated by Hainan Province, Ministry of Finance and the State Taxation Administration.