The Hainan Free Trade Port (FTP) recently announced an extension of corporate income tax (CIT) incentives for enterprises in encouraged industries through December 31, 2027.

According to the announcement, enterprises in encouraged industries registered and with substantive operations in the Hainan FTP are subject to a reduced CIT rate of 15%. These include resident enterprises registered in the Hainan FTP, resident enterprises with branches (unincorporated entities) in the Hainan FTP, and non-resident enterprises with branches or premises in the Hainan FTP.

For enterprises whose head offices are located in the Hainan FTP, only their head offices and branches located in the Hainan FTP (not including third-tier [or lower] branches located in the Hainan FTP of second-tier [or lower] branches located outside the Hainan FTP) are eligible. Branches located outside the Hainan FTP are ineligible.

For enterprises whose head offices are located outside the Hainan FTP, only their branches in the Hainan FTP (not including third-tier [or lower] branches located in the Hainan FTP of second-tier [or lower] branches located outside the Hainan FTP) are eligible. Head offices and their branches located outside the Hainan FTP are ineligible.

The announcement also extends the CIT exemption on income from new overseas direct investments for enterprises in the tourism, modern services, and high-tech sectors. This covers new overseas direct investments made between January 1, 2020, and December 31, 2027, in the form of establishing new overseas branches and enterprises, increasing the capital or equity in already established overseas enterprises, and acquiring equity in overseas enterprises.

The announcement further clarifies that intangible assets shall be deducted in one lump sum or accelerated for amortization starting from the year that they become available for use. For self-developed intangible assets, the time of purchase shall be determined by the time they meet the expected use requirements. Enterprises wishing to shorten the amortization period or accelerate the amortization of purchased intangible assets may refer to the Circular of the State Taxation Administration on Issues Regarding the Handling of Corporate Income Tax for the Accelerated Depreciation of Fixed Assets Held by Enterprises.

Second-tier branches that have adopted audit-based collection and the branches or premises of non-resident enterprises may also benefit from lump-sum deduction or accelerated depreciation/amortization.