Processing value-added of 30% exempt from customs duties from Hainan to mainland in China

Interpretation of Hainan's 30% Value-Added Processing Tariff Exemption Policy

A core preferential policy of the Hainan Free Trade Port stipulates that goods produced by encouraged industries using imported components, with value-added processing in Hainan reaching or exceeding 30%, are exempt from import tariffs when entering the mainland from Hainan.

This policy will take effect after Hainan's island-wide customs clearance operation commences on December 18, 2025, serving as a vital bridge connecting Hainan with mainland markets. Its core hinges on the “30%” threshold, calculated as: [(Domestic Sales Price of Goods - Price of Imported Materials - Price of Domestically Procured Materials) / (Price of Imported Materials + Price of Domestically Procured Materials)] × 100% ≥ 30%.

Following the closure, the policy underwent comprehensive upgrades, delivering greater benefits to enterprises:

● Lowered Threshold: Removed the requirement that encouraged industries must account for over 60% of a company's main business revenue, enabling broader participation.

● Expanded Scope: Included “zero-tariff” imported goods within the scope of materials, allowing enterprises to enjoy dual benefits of “zero tariffs + processing value-added.”

● Updated model: The calculation formula has been optimized, allowing the value of certified locally produced Hainan goods to be deducted from the price of domestically procured materials, making it easier for enterprises to achieve the 30% value-added rate.

● Extended chain: The scope of “cumulative processing value-added” has been expanded, permitting upstream and downstream enterprises to jointly achieve processing value-added, providing new pathways for coordinated industrial chain development.

For example, a Hainan enterprise imports beef (imported materials) from abroad, processes it into beef jerky on the island, and then sells it to the mainland. If the value created through processing, packaging, and other stages exceeds 30% of the total cost of the imported beef and domestically procured packaging materials, the beef jerky can enter the mainland duty-free, subject only to import VAT and consumption tax as required by regulations.

This policy not only effectively reduces enterprises' production and logistics costs but also encourages deep processing in Hainan, enhancing product value-added. It has spurred the clustered development of industries such as food processing, biomedicine, and high-end manufacturing in Hainan, forming an industrial chain model of “international R&D + Hainan manufacturing + nationwide distribution.”

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