Foreword: Following Hainan's customs closure on December 18, 2025, the scope of "zero-tariff" goods expanded from 1,900 tariff lines before the closure to approximately 6,600, covering 74% of enterprises' production materials. Import equipment and raw material tax costs dropped by 20% directly, while personal income tax for high-end and scarce talents is capped at 15%. This open hinterland, backed by mainland China's ultra-large-scale market, is redefining the business logic for foreign investors and capturing the attention of global capital.

"Customs closure" does not mean isolation, but rather a new model of opening-up. Hainan will become a special regulatory area within China's customs territory, implementing a supervision system of "'First Line' liberalization, 'Second Line' regulation, and free movement within the island."

The "First Line" refers to the boundary between Hainan and overseas, which will be maximally liberalized. The "Second Line" refers to the boundary between Hainan and mainland China, where necessary controls will be implemented.

Multinational investors can utilize Hainan as a strategic gateway to the Chinese market while radiating to the Asia-Pacific and global markets through Hainan.

Tax incentives constitute one of Hainan Free Trade Port's most direct attractions. The "Dual 15%" tax policy reduces corporate income tax to 15% for eligible encouraged industry enterprises and exempts high-end and scarce talents from personal income tax on the portion exceeding an actual tax burden of 15%.

To enjoy these policies, enterprises must meet the "substantial operation" requirements, including conducting production and operations, finance, personnel, and asset management in Hainan.

The "zero-tariff" policy has undergone comprehensive upgrading. Post-closure, Hainan implements a negative list management system for imported taxable goods, with all goods not listed in the tax catalog exempt from tariffs. The scope of beneficiaries has expanded significantly, essentially covering all types of enterprises and institutions on the island with actual import needs. Enterprises can save approximately 20% in tax costs on imported equipment and raw materials.

Foreign investors can fully leverage Hainan's geographical location and policy advantages to establish Asia-Pacific centralized distribution centers in Hainan.

Example: An American high-end medical device Company A has customers throughout multiple Asia-Pacific countries and regions, requiring rapid spare parts replacement services. However, these components carry extremely high unit values. Pre-clearance would tie up substantial capital in tariffs and VAT, yet the corresponding customers might not ultimately need them. For this business pain point, Company A can fully utilize Hainan's location advantage and the bonded functions of the free trade zone by establishing an Asia-Pacific centralized distribution center in Hainan. Components can first be shipped from the US to Hainan and warehoused under bonded status, then individually cleared and distributed upon receiving repair requests from Asia-Pacific customers. This business model both improves shipping response speed and resolves the capital tie-up issue from prepaid tariffs.

Hainan focuses on developing four pillar industries: tourism, modern services, high-tech industries, and tropical characteristic high-efficiency agriculture. However, post-customs closure, policies specifically support enterprises in extending their industrial chains toward high value-added segments.

The processing value-added tariff exemption policy has also been optimized: the restriction requiring enterprises to have "encouraged industry main business revenue accounting for over 60%" to qualify for benefits has been removed. Goods processed in Hainan with imported materials achieving 30% value-added can enter mainland China exempt from import tariffs.

The 30% processing value-added domestic sales tariff exemption policy has been further refined. Processing value-added from upstream and downstream enterprises can be combined for calculation, and the value of "Hainan-produced" goods is not included in material costs. The policy encourages enterprises to conduct deep processing in Hainan, forming closely coordinated industrial clusters.

Example: A German precision instrument equipment Company B wants to sell products to mainland China. Direct customs clearance would require paying tariffs and import VAT on finished products, substantially increasing sales costs and reducing market competitiveness. However, if Company B establishes a processing plant in Hainan, ships components from Germany to Hainan (without paying tariffs and import VAT), and processes components into finished products in Hainan with value-added exceeding 30% before selling finished products from Hainan to the mainland market, all tariffs can be exempted, thereby significantly reducing Company B's comprehensive product costs. Compared to foreign enterprises that directly export finished products to mainland China through customs clearance, establishing a processing plant in Hainan would place Company B in a highly advantageous position in the mainland Chinese market competition.

To fully utilize preferential policies following Hainan's customs closure, foreign investors should adopt the following strategies: Deeply understand policy details, particularly benefit eligibility standards and conditions.

Conclusion: Amid rising global trade protectionism, Hainan Free Trade Port's open model represents a different choice. Post-closure Hainan Free Trade Port is rewriting the business landscape for global investors, with numerous multinational corporations intensively studying how to enter Hainan quickly and effectively to fully leverage its policy dividends.

For foreign investors, post-closure Hainan is no longer merely a simple tax haven, but rather a key high-end industrial base and a strategic pivot point for deeply integrating into China's economic development and radiating to the global market.