China plans to create the world's largest duty-free zone in Hainan

Publishing Time:2024-06-11 11:09:49Pageviews:43

China is turning a tropical island province the size of Belgium into the world's largest duty-free shopping zone. The goal is to establish a single duty-free zone with a separate customs system in China's Hainan province as early as next year.

 

China has cut the income tax rate for certain companies in Hainan from 25 per cent to 15 per cent and removed import duties on some goods. China also extended Hainan's visa-free entry policy to citizens of 59 countries. The establishment of a separate customs zone in Hainan next year will also further simplify the luxury goods consumption tax levied locally. Referring to the province's annual tax-free sales target of 300 billion yuan around 2025, Chen Yalei, head of Asia research at China Renaissance Capital, said, "If you look at Hainan Island, the main goal is to establish a complete duty-free zone, thereby bringing some tax-free sales activities from overseas back to China." It's a huge market."

 

China introduced a tax-free policy on Hainan's outlier islands in 2011 to boost local economic growth and narrow the gap with wealthier provinces. In 2020, China will more than triple the duty-free shopping quota for visitors to Hainan's outlying islands. Shoppers are flocking to this palm-studded southern island for shorter but more cost-effective shopping holidays, which already have several of the world's largest duty-free shopping malls. In 2022, Haikou International Duty-Free City, the world's largest single duty-free shop, covering 280,000 square meters, opened.

 

Customs data show that the amount of duty-free shopping on Hainan's outlying islands in the 2024 Spring Festival holiday reached 2.489 billion yuan, an increase of nearly 60% year-on-year. Hainan's duty-free market has also caught the attention of Western companies. Last year, Diffius, the travel retail group owned by luxury giant LVMH, announced plans to invest in a 128,000-square-meter Seven-star luxury retail and entertainment venue in Sanya. In 2022, the China tourism retail headquarters of the Us-Based Tepesci Group, which owns brands such as Coach, will be located in Hainan.

 

(Financial Daily)

—— The content of this article is translated by Al ——