(All information in this document is authentic in Chinese. English is provided for reference only. In case of any discrepancy, the Chinese version shall prevail.)

Announcement on Promulgating the Measures of Customs for the Implementation of the "Zero-Tariff" Policy for Vehicles and Yachts in the Hainan Free Trade Port (for Trial Implementation)
GACC Announcement [2021] No.1

The Measures of Customs for the Implementation of the "Zero-Tariff" Policy for Vehicles and Yachts in the Hainan Free Trade Port (for Trial Implementation) (see the annex) are hereby formulated and promulgated in accordance with the Circular jointly released by the Ministry of Finance, the General Administration of Customs and the State Taxation Administration on the "Zero-Tariff" Policy for Vehicles and Yachts in the Hainan Free Trade Port (Cai Guan Shui [2020] No.54) to implement the Master Plan for the Construction of the Hainan Free Trade Port.

This announcement is hereby given.

Annex: Measures of Customs for the Implementation of the "Zero-Tariff" Policy for Vehicles and Yachts in the Hainan Free Trade Port (for Trial Implementation).doc

General Administration of Customs of China (GACC)

January 5, 2021

Annex

Measures of Customs for the Implementation of the "Zero-Tariff" Policy for Vehicles and Yachts

in the Hainan Free Trade Port (for Trial Implementation)

Article 1 The Measures of Customs for the Implementation of the "Zero-Tariff" Policy for Vehicles and Yachts in the Hainan Free Trade Port (for Trial Implementation) (hereinafter referred to as the "Measures") are formulated in accordance with the relevant laws, administrative regulations, and the Circular of the Ministry of Finance, the General Administration of Customs and the State Taxation Administration on the "Zero-Tariff" Policy for Vehicles and Yachts in the Hainan Free Trade Port (Cai Guan Shui [2020] No.54, hereinafter referred to as the "Circular") to implement the Master Plan for the Construction of the Hainan Free Trade Port.

Article 2 Before the island-wide independent customs operations, imported ships, aircraft, vehicles, and yachts used for commercial purposes by enterprises engaged in transport and tourism and registered in the Hainan Free Trade Port with independent legal person status (aviation enterprises shall take the Hainan Free Trade Port as the main operating base) shall be exempt from import tariffs, import value-added tax and consumption tax.

The specific scope of vehicles and yachts that enjoy the "zero-tariff" policy (hereinafter referred to as the "Vehicles and Yachts under the 'Zero-Tariff' Policy") is subject to the annex to the Circular - List of Vehicles and Yachts under the "Zero-Tariff" Policy in the Hainan Free Trade Port, which is subject to the adjustments by the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration in concert with the relevant authorities.

Article 3 The list of enterprises eligible for the policy (hereinafter referred to as the "List of Enterprises") shall be transmitted to Haikou Customs through the "single window" for international trade after being finalized by the authorities of transport, culture and tourism, market regulation, maritime affairs, and civil aviation of Hainan Province in concert with the Department of Finance of Hainan Province, Haikou Customs, and the Hainan Provincial Tax Service of the State Taxation Administration. The Department of Transport of Hainan Province is responsible for notifying Haikou Customs of the List of Enterprises in writing before the realization of the transmission of the List of Enterprises via the Internet.

Article 4 Vehicles and Yachts under the "Zero-Tariff" Policy are subject to administration in accordance with the principle of "one account for one enterprise."

Before the initial declaration for the import of Vehicles and Yachts under the "Zero-Tariff" Policy, enterprises eligible for the policy (hereinafter referred to as "Enterprises") shall, in accordance with the relevant provisions of the Administrative Provisions of Customs of the People's Republic of China on the Registration of Customs Declaration Entities, handle registration with the customs, and improve the enterprise account information in the system of the "Hainan Platform for the Import of Production Equipment and Vehicles with Zero-Tariff" under the "Single Window" for international trade.

Article 5 When declaring the import of Vehicles and Yachts under the "Zero-Tariff" Policy, an Enterprise shall fill the “Customs at the Place of Declaration” in the import customs declaration form with the name and code of the customs district where the relevant subordinate customs or business site under the "Haikou Customs" is located (excluding "Sansha Customs"); fill the nature of tariff collection or exemption with "Vehicles and Yachts under the 'Zero-Tariff' Policy" (code: 492), and if it volunteers to pay import value-added tax and consumption tax, fill the nature of tariff collection or exemption with "Vehicles and Yachts under the 'Zero-Tariff' Policy (Subject to Import Tax)" (code: 494) when making customs declaration; fill the mode of supervision with "General Trade" (0110), "Lease of Less than One Year" (code: 1500), or "Leasing Trade" (code: 1523); fill the mode of tariff collection, reduction, or exemption with "Subject to the Nature of Tariff Collection or Exemption" (code: 5); and fill the consuming and using entity with the name of the entity.

Article 6 Vehicles and Yachts under the "Zero-Tariff" Policy shall be used by Enterprises in the Hainan Free Trade Port for operation purposes only and subject to supervision by the customs in accordance with the law.

The period of supervision is: eight years in the case of ships (including yachts) and aircraft; and six years in the case of vehicles.

The period of supervision shall commence on the date when goods are released.

Customs supervision shall be automatically lifted upon expiration of the period of supervision.

Enterprises shall, within the period of customs supervision, keep and use imported Vehicles and Yachts under the "Zero-Tariff" Policy in accordance with the policy and customs provisions, except as otherwise prescribed by the General Administration of Customs.

Article 7 An Enterprise shall, within the period of customs supervision, submit a report on the use of Vehicles and Yachts under the "Zero-Tariff" Policy in the previous year to the customs of the place where it is located (hereinafter referred to as the "Competent Customs") by each June 30.

Article 8 Where an Enterprise indeed needs to transfer any Vehicles and Yachts under the "Zero-Tariff" Policy due to reasons such as bankruptcy within the period of customs supervision, it shall apply to the Competent Customs through the "Hainan Platform for the Import of Zero-Tariff Production Equipment and Vehicles" before the transfer, and complete procedures for transfer upon examination and approval by the customs.

Specifically, if an Enterprise carries out the transfer to any entity ineligible for the policy, it shall apply to the Competent Customs through the "Hainan Platform for the Import of Zero-Tariff Production Equipment and Vehicles" before the transfer and supplement related import taxes in accordance with provisions. The duty-paid value subject to supplemental tax payment shall be depreciated according to the ratio of the length of time since the import of the goods to the period of supervision based on the original duty-paid value of Vehicles and Yachts under the "Zero-Tariff" Policy at the time of import. The calculation formula is as follows:

Duty-paid value subject to supplemental tax payment = original duty-paid value of Vehicles and Yachts under the "Zero-Tariff" Policy at the time of import × [1－length of time since the import of Vehicles and Yachts under the "Zero-Tariff" Policy / (period of supervision × 12)]

The length of time since the import of Vehicles and Yachts under the "Zero-Tariff" Policy shall commence on a monthly basis on the date when goods are released. If the length is less than one month but more than 15 days, a month shall prevail. If the length is no more than 15 days, no period shall apply.

The customs supervision over Vehicles and Yachts under the "Zero-Tariff" Policy shall be lifted as of the supplemental tax payment and completion of the relevant customs procedures.

Article 9 If an Enterprise needs to mortgage any Vehicles and Yachts under the "Zero-Tariff" Policy for a loan with any domestic bank or non-banking financial institution within the period of supervision, it shall apply to the Competent Customs through the "Hainan Platform for the Import of Zero-Tariff Production Equipment and Vehicles" in advance, and provide a guarantee of tax payment recognized by the customs, and upon examination and approval by the customs, it shall complete procedures for mortgage of loans as required.

Enterprises may not handle mortgage of loans with their Vehicles and Yachts under the "Zero-Tariff" Policy for any citizen, legal person, or unincorporated organization other than banks and non-banking financial institutions.

Article 10 If an Enterprise needs to return any Vehicles and Yachts under the "Zero-Tariff" Policy for exit or export within the period of supervision, it shall apply to the Competent Customs through the "Hainan Platform for the Import of Zero-Tariff Production Equipment and Vehicles," and complete relevant procedures upon examination and approval by the customs.

The customs supervision over Vehicles and Yachts under the "Zero-Tariff" Policy shall be lifted as of the date of return for exit or export, and the customs will not make supplemental collection of the relevant taxes on such Vehicles and Yachts under the "Zero-Tariff" Policy.

Article 11 Except under special circumstances, if an Enterprise applies for completing procedures for transfer of any Vehicles and Yachts under the "Zero-Tariff" Policy or mortgage for a loan, the Competent Customs shall decide whether to approve the application within ten working days upon acceptance of the application.

Article 12 The customs shall, in accordance with the Customs Law of the People's Republic of China, the Regulations of the People's Republic of China on Customs Inspections, and other relevant provisions, carry out inspection of the relevant enterprises that import or use Vehicles and Yachts under the "Zero-Tariff" Policy.

Article 13 An Enterprise violating the relevant provisions of Paragraph 1, Article 5 of the Circular and diverting any Vehicles and Yachts under the "Zero-Tariff" Policy for other purposes shall make supplemental payment of the relevant import taxes as required. The duty-paid value subject to supplemental tax payment shall be depreciated according to the ratio of the period of time for which supplemental payment of taxes is required to the period of supervision based on the original duty-paid value of Vehicles and Yachts under the "Zero-Tariff" Policy at the time of import. The calculation formula is as follows:

Duty-paid value subject to supplemental payment of taxes = original duty-paid value of Vehicles and Yachts under the "Zero-Tariff" Policy × [period of time for which supplemental payment of taxes is required / (period of supervision × 365)]

The period of time for which supplemental tax payment is required in the above calculation formula shall be the actual period of time during which the enterprise violates the relevant provisions of Paragraph 1, Article 5 of the Circular and uses any Vehicles and Yachts under the "Zero-Tariff" Policy for other purposes and calculated on a daily basis, with any actual daily use period of less than or more than eight hours being counted as one day.

Article 14 Violations of the Measures, if constituting acts of smuggling or violating the provisions on customs supervision, shall be handled by the customs in accordance with the relevant provisions of the Customs Law of the People's Republic of China and the Regulations of the People's Republic of China for Implementation of Customs Administrative Punishments; and if a crime is constituted, the criminal liability shall be investigated for in accordance with the law.

Article 15 The Measures shall be construed by the General Administration of Customs.

Article 16 The Measures shall come into force as of the date of promulgation.