HAIKOU, December 11. /TASS/. The Hainan authorities have stepped up a policy to reduce the fiscal burden on business and will no longer levy value added tax (VAT) from foreign trade commercial organizations when completing a transaction to acquire a sea vessel from Chinese companies with its subsequent registration in the special customs zone of Yangpu port, reported the Hainan administration.
According to the statement, such rules will remain in effect until the end of 2024. They apply to logistics companies intending to use a sea vehicle in international trade. Interested businesses can electronically submit an application to the competent authorities in order to issue a VAT exemption permit.
If, in the future, the owner of the vessel subject to such a policy changes, and the new owner has a citizenship that differs from the information declared for obtaining tax benefits, the company is automatically deprived of the corresponding privilege. The same will happen if the company re-formalizes the port of registration or ceases to engage in foreign trade. Such a commercial organization will also be obliged to refund the amount equivalent to the unpaid VAT.
On June 1, the Hainan government published a general development program, which provides for the gradual removal of restrictions and a decrease in the tax burden for companies involved in the economic activities of the regional free trade port. It is assumed that such measures will boost the process of transforming the province into a unique international cluster with an advanced economy hosting campuses of leading universities, advanced laboratories and headquarters of world corporations.
Yangpu is located on the west coast of Hainan and plays a key role in the development of China's transportation network. In 2019, the gross product of this economic region with more than 89,000 residents,exceeded 26 billion yuan ($ 3.7 billion). In accordance with the "Comprehensive plan for the formation of a new integrated sea and land corridor" of China's State Committee for Development and Reforms, by 2035 this port will become a key point for the distribution of goods traffic from various regions of the country to Southeast Asia and Oceania, Europe and North America. It is expected that by 2025 Yangpu will become a major regional transport hub, through which up to 5 million containers will pass annually.