Official Notice on Zero-Tariff Policy for Medicines and Medical Devices in Hainan Free Trade Port

Policy Background and Objective

On September 5, 2024, the Ministry of Finance, National Health Commission, General Administration of Customs, State Taxation Administration, and National Medical Products Administration jointly issued Cai Guan Shui [2024] No. 21. With State Council approval, the notice expands the zero-tariff scope in the Hainan Free Trade Port and strengthens pressure testing ahead of full island closure operations. The policy supports high-quality development of the Boao Lecheng International Medical Tourism Pilot Zone by reducing import costs for medicines and medical devices used in clinical practice, education, and research within the zone. Source: Cai Guan Shui [2024] No. 21 (September 5, 2024)

Eligible Entities and Scope

The policy applies to independently registered and certified entities in the Boao Lecheng Pilot Zone:

• Medical institutions
• Higher medical education institutions
• Medical/pharmaceutical research institutes

Exempt goods include:

• Imported medicines and medical devices already registered in China
• Specially permitted (unregistered in China) medicines (excluding vaccines) and medical devices approved by the Hainan Provincial Government for use in the zone

Tax Exemptions and Optional Payment

• Exempt: import tariff and import VAT
• Eligible entities may voluntarily pay import VAT during customs clearance if desired

Certification and Dynamic Management

The Pilot Zone Administration, together with provincial health, drug supervision, education, science & technology, and finance departments, plus Haikou Customs and provincial tax bureau, certifies eligible entities. The list is dynamically adjusted and notified to customs and tax authorities.

Import and Customs Procedures

• Before importation, the Pilot Zone Administration, in coordination with provincial drug regulators, verifies registration certificates or approval documents for each batch.
• Eligible entities apply for duty exemption at local customs, with the Pilot Zone Administration managing goods per special-permit mode and uploading data to the zone’s traceability platform for full-cycle supervision.

Usage Restrictions

• Medical/pharmaceutical research institutes and higher education institutions: limited to self-use within the zone
• Medical institutions: may sell to on-site patients based on physician prescriptions/medical orders, in quantities consistent with diagnosis/treatment needs and prescription rules; domestic VAT applies per existing rules
• Prohibited: transfer to individuals except through the above channels

Post-Import Supervision and Restrictions

• Customs supervises exempted goods during the regulatory period
• After sale to patients per prescription, goods are no longer treated as duty-exempt items
• Patients must use exempted medicines/devices personally within the zone; resale or removal from the zone (including mailing) is prohibited

Transfer and Violation Handling

• Transfers due to objective reasons require prior approval from provincial drug and health authorities
• For goods still under customs supervision, unpaid duties and VAT must be paid upon approved transfer
• Violations (resale, smuggling, or removal) trigger customs penalties, credit recording, and three-year prohibition on purchasing exempted goods for patients; criminal liability if applicable
• Institutional or physician violations lead to penalties; criminal conviction results in policy ineligibility

Provincial Responsibilities

Hainan Province must:

• Formulate detailed implementation rules in coordination with central departments
• Strengthen supervision, regular data comparison, and violation handling
• Upgrade the zone’s special-permit traceability platform
• Report implementation status every three months to issuing authorities

This notice applies exclusively to the Boao Lecheng Pilot Zone and took effect upon publication on September 6, 2024. Source: Cai Guan Shui [2024] No. 21 (September 5, 2024)