On June 1, the Central Committee of the Communist Party of China and the State Council issued the "Overall Plan for the Construction of Hainan Free Trade Port" which proposed that the tax exemption limit for offshore islands should be increased from 30,000 to 100,000, the income

Sino-Singapore Jingwei Client, June 2 (Zhang Yanzheng) Hainan’s tourism industry is ushering in major benefits. On June 1, the Central Committee of the Communist Party of China and the State Council issued the "Overall Plan for the Construction of Hainan Free Trade Port" (hereinafter referred to as the "Plan"), which proposed that the tax-free quota for offshore islands would be increased from 30,000 to 100,000, and the income tax rate for encouraged enterprises would be reduced to 100,000. 15%, the personal income tax rate for talents shall not exceed 15%, residents on the island will purchase imported goods tax-free based on the positive list, support the pilot opening of seventh freedom rights in Hainan, and allow airlines from relevant countries and regions to carry flights to third countries (regions) via Hainan passenger and cargo business, etc.

Affected by this news, A-share Hainan concept stocks performed actively on June 2. Wind data shows that the Hainan Free Trade Port Index rose by more than 5% at the opening, with sectors such as tourism hotels and horse racing opening higher. Dadonghai A and Caesars Tourism rose by the limit. China National Travel Service, Fosun Tourism Culture, HNA Holdings, etc. followed suit.

According to analysts, the introduction of the free trade port plan is of great significance to Hainan's future development. It will not only help enhance Hainan's vitality, but also help bring new development opportunities to Hainan's tourism industry. With the liberalization of air traffic rights, airlines from various countries will continue to pour in. For Hainan's local airline HNA, this will not only bring opportunities, but it will also face unprecedented challenges.

Data map of Sanya, Hainan, China-Singapore Jingwei, photo by Zhang Yanzheng

tax-free limit increased from 30,000 to 100,000

The "Plan" points out that the duty-free shopping limit on outlying islands will be relaxed to 100,000 yuan per person per year, and the types of duty-free goods will be expanded. For tourists visiting Hainan, the previous tax-free shopping limit was 30,000 yuan. After the implementation of this "Plan", the "buy, buy, buy" limit for duty-free goods will increase to 100,000 yuan, which is three times higher than before. This is 20 times the 5,000 yuan quota at the beginning of 2011.

It is understood that from 2011 to the present, Hainan has been a pilot area for the offshore island tax exemption policy. In 9 years, the tax exemption limit has been increased five times. Public information shows that on April 20, 2011, Hainan launched a pilot implementation of the tax-free shopping policy for tourists from outlying islands, becoming the fourth region to implement this policy after Okinawa in Japan, Jeju Island in South Korea, Matsu, and Kinmen. The tax-free shopping limit is per person. 5,000 yuan each time; on November 1, 2012, the duty-free shopping limit for tourists from Hainan Islands was increased to 8,000 yuan per person per time; on February 1, 2016, the duty-free shopping limit was adjusted again to 16,000 yuan per person per year; in December 2018 Starting from January 1st, the annual cumulative tax-free shopping limit for tourists from Hainan’s outlying islands will increase to 30,000 yuan.

It can be seen that in this "Plan", the tax exemption limit for offshore islands has been increased from 30,000 yuan to 100,000 yuan, which is the largest increase in the tax exemption limit in Hainan.

Duty-free shop shopping data photo by China-Singapore Jingwei Zhang Yanzheng

CITIC Securities believes that the market has certain expectations for the increase in tax-free quotas, but it still highlights the support of the Ministry of Finance and other ministries and commissions for the Hainan region. The plan does not mention changes in the threshold for personal postal tax or optimization of the number of items purchased. Based on Hainan's high positioning, there is the possibility of further relaxation in the future.

In response to the increase in the quota and the expansion of the types of tax-free goods, CITIC Securities said that generally speaking, if the threshold for personal postal tax is not raised and the limit on the number of pieces is not opened, but only the tax-free quota is increased, this will stimulate and improve per capita consumption. Not big, but combined with the recently launched Hainan repurchase or Sanya duty-free shop repurchase platform, the increase in tax-free quota will be effectively transformed into an increase in per capita consumption.

It is worth noting that on the evening of June 1, China International Travel Service issued an announcement stating that it planned to change the company's Chinese name from " China International Travel Service Co., Ltd. " to " China Tourism Group China Duty Free Co., Ltd. ", and its English name Corresponding changes have also occurred. China International Travel Service stated that the name change has been reviewed and approved by the State Administration for Market Regulation.

In addition, China International Travel Service’s announcement also stated that at the beginning of 2019, the company had divested its travel agency business, and the company’s development strategy has also been adjusted to focus on the travel retail business with duty-free business as the core.

Tianyancha shows that China National Travel Service’s business scope includes investment and management of tourism services and tourism product-related projects. The company owns five subsidiaries including China Duty Free (Group), China National Travel Service Investment and Development, and China Duty Free Group Sanya City Duty Free Shop. company. Information shows that China Duty Free (Group) Co., Ltd. is a state-owned company with a comprehensive duty-free license approved by the State Council. It has established long-term cooperative relationships with more than 300 of the world's top luxury brands and provides tourists with thousands of varieties. Duty-free shopping services, and through the brand "China Duty Free", more than 200 duty-free shops have been set up across the country (including Hong Kong, Macao and Taiwan).

Song Qinghui, a well-known economist, said in an interview with a reporter from China-Singapore Jingwei that China International Travel Service’s latest move is to cater to the hot spots of the plan, focus on duty-free business, and adapt to the development needs of the new situation.

He believes that the introduction of the free trade port plan is of great significance to Hainan's future development. It will not only help enhance Hainan's vitality, but also help bring new development opportunities to Hainan. "The most important keyword in the full text of the "Plan" is 'freedom'. Its openness is comparable to that of the Shenzhen Special Economic Zone, which is beneficial to listed companies in Hainan-related sectors."

Regarding the "Plan" mentioned in the "Plan", "the tax exemption limit for offshore islands has been increased from 30,000 Song Qinghui said that this policy will have a great positive impact on the tourism industry. It is also one of the policies with the highest value and widest impact given to Hainan by the country. This move will not only meet the tourism consumption needs of ordinary tourists, but is also expected to promote the continued growth of Hainan Province’s domestic tourism revenue and the number of domestic tourists received.

pilot opens seventh freedom rights

The "Plan" mentioned that a more open air transportation policy will be implemented. On the basis of reciprocity, promote the opening of third and fourth freedom of movement to and from Hainan for both carriers in the bilateral air transport agreement, and expand Hainan freedom including fifth freedom of movement in accordance with my country's overall air transport policy. Traffic rights arrangements necessary for the construction of trade port . Support the pilot opening of the seventh freedom of navigation in Hainan. Airlines from relevant countries and regions are allowed to carry passenger and cargo services to third countries (regions) via Hainan. Implement intermodal transportation of international air transfer passengers and their baggage. Support airlines with their main base in Hainan in developing international routes. Hainan flights in and out of the island are allowed to refill with bonded aviation fuel.

Information on the official website of the Civil Aviation Administration of China shows that seventh freedom rights refer to the right of airlines of a certain country or region to operate independent routes completely outside the territory of their own country or region, and to carry passengers and cargo between two countries or regions overseas. For example, the Paris- Singapore route is operated by (Germany) Lufthansa , which means that France and Singapore have given Lufthansa seventh freedom rights.

Aviation data map photographed by Zhang Yanzheng of Sino-Singapore Jingwei

Civil aviation expert Li Xiaojin said in an interview with Sino-Singapore Jingwei client that if Hainan opens seventh freedom rights, overseas airlines can open flights from Hainan to and from third countries (regions) , without returning to your home country. For example, Singapore Airlines can open a round-trip route from Sanya to Tokyo, and the aircraft can continue to fly a round-trip route from Sanya to Seoul after completing this flight. If fifth freedom rights are opened, the aircraft can only operate Singapore-Sanya-Tokyo, and it must operate with the same flight number and the same aircraft.

Li Xiaojin believes that under the premise of the expansion of the Hainan Airlines market, competition among airlines from various countries has intensified. With the support of various policies, various industries in Hainan will make new breakthroughs, which is expected to attract more passengers to and from Hainan and attract airlines from various countries to set up operations in Hainan. With the influx of airlines from various countries, it is both an opportunity and an unprecedented challenge for Hainan's local airline HNA. It is expected that airlines from neighboring countries may be the first to develop routes from Hainan to Southeast Asia, Japan, South Korea, Russia and South Asia.

"According to the research of the Civil Aviation University team, judging from the data of the past 40 years, Hainan's aviation industry has lagged behind the local economic and social development, and its leading role is not sufficient.With the help of the free trade port construction, it is necessary to give full play to the role of air transportation in promoting the flow of people and logistics, thereby driving the accumulation of capital flow and information flow, and realizing the formation of a high-quality open economic pattern in Hainan and even the whole country. It should be noted that Hainan’s air transport industry must make a difference, respond quickly to market demand, learn lessons from previous expansion, and fully support Hainan’s opening up. "Li Xiaojin said. (China-Singapore Jingwei APP)

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