Key Takeaways

  • Finance and Taxation Notice [2025] No. 3 extends specified Hainan FTP corporate income tax incentives through 31 December 2027; eligibility must be checked under the rules applicable to the tax year.
  • Island-wide customs operations began on 18 December 2025; specific customs arrangements depend on the goods and rules in force.
  • Hainan incentives do not replace mainland compliance; Golden Tax Phase IV still applies.
  • Choose the right industry, address, and filing path, or the incentive will not apply.
  • Hong Kong investors can use Hainan as a cross-border springboard, but with real business and compliant funds.

Introduction

The Hainan Free Trade Port (FTP) is a hot search term in corporate services lately. Many businesses focus on Hainan’s income-tax and customs policies, but registration in Hainan does not itself establish eligibility. Finance and Taxation Notice [2025] No. 3 extends specified CIT incentives through 31 December 2027. The 2025–2035 master-plan framework describes longer-term reform direction; actual eligibility remains subject to detailed rules for each stage. Customs operations do not mean all businesses are tax-exempt.

This article sets out the policy facts, the boundaries of applicability, and the formation steps without exaggeration, so you can judge whether a Hainan entity fits your situation.

1. The Substance of Hainan's Tax Incentives

01 Corporate income tax incentives: check the rules for the relevant year

Finance and Taxation Notice [2025] No. 3 extends specified corporate income tax incentives under Notice [2020] No. 31 through 31 December 2027. Existing eligibility depends on Hainan registration, substantive operation, industry and other statutory conditions under the rules for the relevant tax year. The 2020 Hainan FTP master plan sets out a further reform direction for 2025–2035; it should not be read as an automatic 15% rate for every Hainan company throughout that period.

02 Not "register and enjoy"

Check the industry, revenue, substantive-operation and filing requirements under the rules for the relevant tax year. Registration or a hosted address in Hainan alone does not establish eligibility. Verify the detailed rules and effective period with current tax-authority documents.

03 What changes after closed-border

Island-wide customs operations began on 18 December 2025, based on “first line open, second line regulated, island-wide free flow.” Customs, tax and supervision rules vary by goods and business; this does not mean all goods or companies are tax-exempt.

2. Which Companies Truly Fit Hainan

Encouraged-industry directions

Tourism, modern services, high-tech, efficient tropical agriculture, plus processing, shipping, trade, and healthcare sub-sectors within the catalogue. The test follows the latest encouraged-industry catalogue.

Who fits

Founders and investors who want a light-asset layout for mainland or overseas business, need a cross-border trade/services channel, or happen to operate in an encouraged industry.

Who does not fit

Pure mainland domestic trade, no substantive operation but wanting "just the 15% rate", or industries outside the catalogue will not get the incentive and only add maintenance cost.

3. Standard Formation Process in Hainan

01 Name and industry check: Confirm the main business is encouraged to avoid a later filing rejection. 02 Registered address: Confirm an address arrangement that meets local registration requirements and supports the actual business; verify any park-specific rules and correspondence handling before filing. 03 Registry incorporation: Submit shareholders, articles, and appointments, then obtain the business licence. 04 Bank account and funds: Open accounts as needed; cross-border funds must meet forex and customs compliance. 05 Tax filing and incentive application: File/classify the encouraged business and retain proof of substantive operation. 06 Ongoing maintenance: Annual reports, bookkeeping, and audits must be genuine; under Golden Tax Phase IV data is linked, and inflating costs is risky.

4. How Overseas Hong Kong Investors Use Hainan

As a cross-border springboard

Hong Kong-invested companies can use Hainan FTP's openness in trade, shipping, and services to set up a holding or operating entity connecting the mainland and overseas markets. But there must be real business flow, contracts, and staff—no empty shells.

Link with the Hong Kong company

A Hong Kong company's standard profits tax is 16.5%, with a two-tier lower rate on the first HKD 2 million of profits, and there is no VAT and no capital gains tax. Hainan's 15% CIT and Hong Kong's tax system cover different segments; combining them requires looking at the overall structure and transfer-pricing compliance. (Subject to the latest policy at the time of filing.)

Caution

A Hainan company also needs substantive operation and genuine bookkeeping; using Hainan as a "tax shelter shell" triggers anti-avoidance and substance reviews.

5. Common Misjudgements and Pitfalls

Misjudgement 1: Registration in Hainan automatically grants incentives

Wrong. Encouraged industry plus filing plus substantive operation—all three—are required.

Misjudgement 2: Closed-border means all tax-free

Wrong. Closed-border is a regulatory model change; tariff and CIT still follow their rules, and tax exemption applies only to specified lists and scenarios. (Subject to the latest policy at the time of filing.)

Misjudgement 3: Mainland obligations waived

Wrong. A Hainan company is still a mainland legal person; subscribed capital, capital-reduction publicity, 20% individual income tax on equity transfer, and Golden Tax bookkeeping all still apply. Under the new Company Law, LLC subscribed capital must be paid within 5 years, and pre-existing overdue portions must be adjusted before 2027-06-30. (Subject to the latest rules at the time of filing.)

Misjudgement 4: Deregistration is easier

Wrong. Hainan deregistration is the same as the mainland; revocation ≠ deregistration, and anomalies must be genuinely cleared before exit.

6. Hainan vs Qianhai / Nansha / Hong Kong

Tax burden comparison

Corporate income tax incentives in Hainan and other locations have specific eligibility conditions and policy periods; Hong Kong profits tax follows a separate system. Compare the rules effective for the relevant year, substantive-operation requirements and compliance costs, not headline rates alone.

Applicable scenarios

Mainland domestic trade favours Shenzhen/Guangzhou convenience; cross-border and trade channels favour Hainan or Hong Kong. Decide by industry, fund flows, and compliance cost together, not by the tax-rate number alone.

FAQ

Q1: Is a Hainan company's CIT always 15%? A: Not automatically. Check the effective policy for the relevant tax year, industry, substantive operation and filing requirements. Specified existing incentives are extended through 31 December 2027; the 2025–2035 reform framework does not itself grant every company an entitlement.

Q2: Which businesses may fit Hainan after island-wide customs operations began? A: Island-wide customs operations began on 18 December 2025. Customs arrangements depend on goods, transactions and current rules; assess fit based on the actual business, relevant policies and compliance costs.

Q3: Can overseas Hong Kong capital enjoy Hainan incentives? A: Yes. Hong Kong-invested Hainan encouraged-industry companies meeting the conditions also get 15%, but they must operate substantively, keep genuine books, and align compliantly with the Hong Kong-side structure.

Q4: Can a Hainan company with no business get the incentive? A: No. A company with no substantive operation or merely a name does not qualify and may face a substance review. The incentive rewards genuine local operation.

Q5: Is Hainan deregistration the same as the mainland? A: Yes. Tax clearance first, then registry deregistration; subsidiaries must be deregistered first; a revoked company must go through revocation-to-deregistration, and anomalies must be genuinely cleared.

Q6: Does subscribed capital in Hainan also need full payment within 5 years? A: Yes. Hainan companies follow the mainland new Company Law: LLC subscribed capital must be paid within 5 years from incorporation, and pre-existing overdue portions must be adjusted before 2027-06-30. (Subject to the latest rules at the time of filing.)

Policy references

Related Services and Next Steps

  • Hainan enterprise services (see 开始我的事业服務內容)
  • Registered address services and park selection (see 经营我的生意服務內容)
  • Accounting and tax filing (see 会计与税务服務內容)
  • Hong Kong company formation and cross-border structuring (see 开始我的事业服務內容)

Subject to the latest policy; please consult an adviser for a specific plan.