Circular on the Policy of Hainan Free Trade Port on Refueling Domestic Ships with Both Domestic and Foreign Trade Goods on Board with Bonded Oil and Locally Produced Fuel Oil 

Cai Shui [2021] No.2

The Department of Finance, the Department of Transportation, the Department of Commerce and the Haikou Customs District of Hainan Province; Hainan Provincial Tax Service of State Taxation Administration; Hainan Maritime Safety Administration：

In order to implement the Overall Plan for the Construction of Hainan Free Trade Port, the policy of Hainan Free Trade Port on refueling domestic ships with both domestic and foreign trade goods on board with bonded oil and locally produced fuel oil is hereby notified as follows:

I. Before the independent customs operations throughout Hainan Island, domestic ships with both domestic and foreign trade goods on board which transit at Yangpu Port are allowed to refuel with bonded oil required for the voyage, or export tax rebate could be claimed if the ships refuel with locally produced fuel oil for the voyage at Yangpu Port. Local fuel oil production enterprises in Hainan Province may declare an export tax rebate (exemption) to tax authorities on the strength of relevant materials such as the customs declaration for exports of fuel oil (with the wording "for domestic ships with both domestic and foreign trade goods on board to refuel" indicated on the remark column). The above bonded oil and locally produced fuel oil subject to the export tax rebate policy are collectively referred to as "tax-free oil". The tax-free oil required for the voyage refueled with by domestic ships in this article is exempt from duties, value-added tax and consumption tax.

II. Domestic ships with both domestic and foreign trade goods on board refer to the ships for which the Operation Permit for Domestic Waterway Transport and the Transport Certificate of Ships (the business scope of both permits includes the "liner transport of domestic water cargo") are issued by the competent departments of transport, and which are filed with the customs for the record and carry domestic and foreign trade container goods simultaneously. The voyage refers to the voyage from the port of departure where foreign trade goods are loaded to Yangpu and from Yangpu to the port of destination with foreign trade goods loaded. Specifically, the port of departure is the first domestic port where foreign trade goods are loaded for transit at Yangpu; the port of destination is the domestic port where foreign trade goods transiting from Yangpu are unloaded finally.

III. The tax-free oil to be refueled with as required for the voyage = current voyage mileage × (fuel consumption rate × rated power / rated aviation speed). The voyage mileage is subject to the Table of China's Coastal Voyage Mileage. The fuel consumption rate is subject to the data in the Manual of Ship Propulsion Machinery Turbine Machine. The rated power is subject to the data in the Ship Inspection Certificate. The rated aviation speed is subject to the data in the Comprehensive Report on Ship Experiments or the Ship and Equipment Manual.

IV. The competent department of communications at Yangpu Port shall, in accordance with the above formula, verify the amount of tax-free oil to be refueled with by eligible ships for the voyage. Tax-free oil operators shall refuel with tax-free oil according to the amount verified by the competent department of communications. A ship may apply for the refueling for cumulatively multiple voyages. Tax-free oil operators shall report information and materials on the refueling of tax-free oil to tax authorities.

V. The tax-free oil operation and supervision process shall be subject to relevant provisions.

VI. The Circular on the Policy of Hainan Free Trade Port on Refueling Domestic Ships with Both Domestic and Foreign Trade Goods on Board with Bonded Oil and Locally Produced Fuel Oil (hereinafter referred to as the "Circular") shall come into force as of the date of promulgation. After the promulgation of the Overall Plan for the Construction of Hainan Free Trade Port but before the promulgation of the Circular, relevant provisions of the policy in the Circular shall apply mutatis mutandis to the fuel oil that has been refueled in the pilot program for domestic ships with both domestic and foreign trade goods on board.

Ministry of Finance

Ministry of Transport

Ministry of Commerce

General Administration of Customs

State Taxation Administration

February 26, 2021

(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.)