Further to the Master Plan for Construction of Hainan Free Trade Port being rolled out by the Central Committee of the Communist Party of China and the State Council of China on 1 June 2020, the Standing Committee of the National People’s Congress passed the Hainan Free Trade Port Law of the People's Republic of China (中华人民共和国海南自由贸易港法) ("Hainan FTP Law") on 10 June 2021, marking a significant move to upgrade the construction of Hainan free trade port from policy support to legislative guarantee.
The Hainan FTP Law has eight chapters and 57 articles, covering a wide range of high-level opening-up measures, including preferential tax policies of zero tariffs, low tax rates, a simplified tax regime, measures to promote the liberalisation and facilitation of trade, investment and cross-border flow of funds, convenience of entry and exit of personnel and transportation, secure and orderly flow of data, and environmental protection. The Hainan FTP Law also offers Hainan Island greater autonomy to formulate local regulations on the construction of the free trade port in light of specific circumstances and actual needs. In addition to the negative list for foreign investment access in the Hainan FTP which came into effect from 1 February 2021 and is shorter compared to the negative lists for foreign investment applicable nationwide and in other free-trade zones, it is expected that the negative list for cross-border service trade appliable in the Hainan FTP will be released by the end of 2021.
The Hainan FTP Law will provide a fundamental legal framework to build a free trade port in an orderly manner in Hainan. It will not only help foster the business environment based on the rule of law; it will also provide new investment opportunities to investors, enable them to benefit from the preferential tax policies, and boost the confidence of market players.
