The Ministry of Finance and other departments issue a notice on the "zero tariff" policy for drugs and medical devices in the Hainan Free Trade Port.

On September 5th, the Ministry of Finance and other departments issued the "Notice on the Zero Tariff Policy for Drugs and Medical Devices in Hainan Free Trade Port". The notice mentioned that before the island is closed off, medical institutions, medical schools, and pharmaceutical research institutions that are registered and independently qualified legal entities within the Boao Lecheng International Medical Tourism Pilot Zone in Hainan (hereinafter referred to as the pilot zone) can import drugs and medical devices as specified in Article 3 of this notice and use them according to the policy, they are exempt from import tariffs and import value-added tax. Relevant units that meet the policy conditions for importing drugs and medical devices can voluntarily pay import value-added tax and apply for exemption when processing tax exemption procedures. The original text is as follows: Notice on the Zero Tariff Policy for Drugs and Medical Devices in Hainan Free Trade Port Finance Tariff [2024] No. 21 People's Government of Hainan Province, Haikou Customs, State Taxation Administration Hainan Provincial Taxation Bureau: In order to support the construction of the Hainan Free Trade Port, continuously expand the scope of "zero tariff" goods, and increase the pressure test of the closed-loop operation, with the approval of the State Council, the zero tariff policy for drugs and medical devices in the Hainan Free Trade Port is hereby notified as follows: 1. Before the island is closed off, medical institutions, medical schools, and pharmaceutical research institutions that are registered and independently qualified legal entities within the Boao Lecheng International Medical Tourism Pilot Zone in Hainan (hereinafter referred to as the pilot zone) can import drugs and medical devices as specified in Article 3 of this notice and use them according to the policy, they are exempt from import tariffs and import value-added tax. Relevant units that meet the policy conditions for importing drugs and medical devices can voluntarily pay import value-added tax and apply for exemption when processing tax exemption procedures. 2. The list of relevant units that meet the policy conditions is determined by the management authority of the pilot zone in conjunction with the Hainan Province Health Commission, Drug Administration, Education, Science and Technology, Finance Departments, Haikou Customs, and State Taxation Administration Hainan Provincial Taxation Bureau, and will be dynamically adjusted and notified to Haikou Customs and State Taxation Administration Hainan Provincial Taxation Bureau. 3. The drugs and medical devices that are exempt from import tariffs and import value-added tax as mentioned in this notice (hereinafter referred to as tax-exempt drugs and medical devices) include: (1) Imported drugs and medical devices that have been approved for registration in China; (2) Medicines (excluding vaccines) and medical devices (hereinafter referred to as licensed medicines and medical devices) that have not yet been approved for registration in China, but have been approved by the Hainan Provincial People's Government and are allowed for import and use in the pilot zone according to the relevant provisions of the State Council. 4. Before relevant units import tax-exempt drugs and medical devices, the management authority of the pilot zone, together with the Hainan Provincial Drug Administration, shall verify the registration certificate or relevant approval documents of each batch of imported drugs and medical devices, confirm that the imported goods of relevant units belong to the drugs and medical devices within the scope of the policy, and notify the customs and tax authorities at the location of the relevant units. When relevant units apply for tax exemption procedures with the customs at the location of the pilot zone, the management authority of the pilot zone should manage the drugs and medical devices that apply for tax exemption according to the current management model for licensed medicines and medical devices, and promptly upload the relevant information to the pilot zone's licensed medicines and medical devices traceability management platform, to supervise the entire process of tax-exempt drugs and medical devices. 5. Tax-exempt drugs and medical devices imported by medical schools and pharmaceutical research institutions that meet the policy conditions can only be used for self-use within the pilot zone. 6. Medical institutions that meet the policy conditions can sell tax-exempt drugs and medical devices to patients who are treated on-site in the institution based on prescriptions (orders) issued by the institution's physicians. The sales volume should meet the medical needs and prescription management requirements. Tax policies shall be in accordance with the relevant provisions of the current domestic tax policies. Except for the above situations, relevant units are not allowed to transfer tax-exempt drugs and medical devices to individuals. 7. Tax-exempt drugs and medical devices imported by relevant units that meet the policy conditions should be subject to customs supervision within the prescribed period; for tax-exempt drugs and medical devices sold to patients by medical institutions based on prescriptions (orders) issued by the institution's physicians, customs will no longer conduct follow-up supervision for specific reduced or exempted goods. 8. Tax-exempt drugs and medical devices obtained by patients in medical institutions for personal use are final products belonging to personal use. They should not be resold, but should be used within the pilot zone and not taken out or sent out of the pilot zone. 9. If relevant units need to transfer tax-exempt drugs and medical devices for objective reasons according to relevant regulations, they should obtain prior approval from the Hainan Provincial Drug Administration, Health Commission, and other relevant departments. For tax-exempt drugs and medical devices within the customs supervision period, relevant units should pay the import duties and import value-added tax to the customs at the location based on confirmation materials from the above departments. If relevant units violate the provisions of this notice by transferring tax-exempt drugs and medical devices that are within the customs supervision period, customs will handle them according to regulations. If patients violate regulations by reselling tax-exempt drugs and medical devices, or taking them out or sending them out of the pilot zone, the management authority of the pilot zone should take measures to retrieve the products. If retrieval is not possible, the management authority of the pilot zone should handle them according to regulations. The transfer and sales activities mentioned above should be subject to domestic value-added tax in accordance with the regulations. 10. The People's Government of Hainan Province should take the main responsibility and work with the Ministry of Finance, General Administration of Customs, State Administration of Taxation, National Health Commission, State Drug Administration, and other departments to formulate management methods, determine the procedures for identifying relevant units that meet the policy conditions, management requirements for tax-exempt drugs and medical devices, requirements for the use of tax-exempt drugs and medical devices by patients in the pilot zone, clarify the standards, penalties, and joint disciplinary measures for handling violations of relevant units and patients who sell, dispose of, or take tax-exempt products out of the pilot zone. The management methods shall be issued and implemented simultaneously with this notice. 11. Since the implementation of the policy, the People's Government of Hainan Province should organize regular comparisons of the import, sales, and usage of tax-exempt drugs and medical devices, strengthen the management and supervision of relevant units that meet the policy conditions in using and disposing of tax-exempt drugs and medical devices (including prescriptions issued by medical institution physicians), promptly handle illegal activities, and report the implementation status to the issuing unit of this notice every 3 months, including basic information of relevant units that meet the policy conditions, import and sales of tax-exempt drugs and medical devices by each unit.Tax exemption data, etc.Hainan Province's relevant departments should improve the functions of the special zone's traceability management platform for licensed drugs and medical devices, carry out technical system upgrades and renovations, meet the management needs of duty-free drugs and medical devices, strengthen information interconnection and sharing of information related to units, patients, duty-free drugs, medical devices, etc., that meet the conditions for policy enjoyment, and strengthen supervision and risk prevention. 12. The People's Government of Hainan Province shall strengthen the supervision and inspection of the implementation of this policy, prevent illegal and irregular behaviors, and timely report relevant situations to the issuing unit of this notice. 13. For violations of this notice that constitute reselling, purchasing on behalf, smuggling duty-free drugs, medical devices, or violations of customs supervision regulations, the customs shall handle them in accordance with relevant regulations; the management authority of the special zone shall include them in the credit records in accordance with relevant regulations, and patients shall not be allowed to purchase duty-free drugs and medical devices within three years. If a crime is committed, criminal responsibility shall be pursued according to law. 14. Units and medical practitioners who violate the regulations on the use and disposal of duty-free drugs and medical devices shall be dealt with in accordance with relevant regulations; if the units are held criminally liable according to law, they shall cease to apply this notice, and the management authority of the special zone shall inform Haikou Customs and the Hainan Provincial Taxation Bureau of the list and the effective date of the cessation of application. 15. This notice shall only apply to the Boao Lecheng International Medical Tourism Pilot Zone in Hainan Province and shall be implemented from the date of promulgation. Ministry of Finance, National Health Commission, General Administration of Customs, State Taxation Administration, National Medical Products Administration This article is selected from the official website of the Ministry of Finance and edited by GMTEight: Chen Wenfang.