[Explainer] What to Expect from Hainan FTP's Special Customs Operations

The island-wide special customs operations of Hainan Free Trade Port officially began on December 18, 2025.

"Customs closure" is a technical term in customs, meaning that Hainan is now designated as a special customs zone rather than a geographical "closure."

Geographically, Hainan is still part of China, and domestic tourists can still freely enter and exit. However, after the "closure," the southern island province will become a unique customs-controlled area different from China's inland regions.

The main feature of this "domestic but outside customs" system is that, following the "closure," Hainan will implement zero tariffs on most goods traded with overseas countries and regions.

After Hainan implements zero tariffs on imported goods, there will be significant potential for arbitrage with the inland regions, so controls on the movement of goods between Hainan and the inland will be necessary. After the "customs closure," goods entering the inland regions from Hainan will, in principle, be treated as imported goods and subject to customs duties and import taxes as per regulations.

What does this mean for shopping?

Firstly, inland visitors shopping in Hainan will be able to enjoy more zero-tariff imported goods.

Before the "closure," zero-tariff imports accounted for 21 percent of the goods in Hainan. After the "closure," this proportion will rise significantly, with approximately 6,600 tariff-free items now available, or 74 percent of all goods.

This means that inland visitors will be able to buy a wider variety of zero-tariff imported products when they visit Hainan.

When carrying goods out of Hainan, individuals will need to follow more stringent regulations than before; otherwise, they may be required to pay additional taxes, and in severe cases, the goods may be deemed smuggled.

There is a strict rule for duty-free shopping in Hainan: "Once purchased, duty-free goods cannot be sold again on the domestic market." With the official implementation of the "closure," actions such as purchasing on behalf of others or using others' quotas for shopping, as well as reselling duty-free products, could lead to violations of this rule.

However, the annual duty-free shopping limit is 100,000 yuan (US$14,201) per person, with no restrictions on the number of purchases. This means that most regular tourists will hardly feel any impact from the "customs closure," provided they shop within the duty-free channels and purchase items under this limit.

Visa-free policy expanded

It's also worth noting that, to support the Hainan Free Trade Port's customs operations, China has introduced a series of the most favorable visa and passenger flow facilitation policies starting from July this year.

The number of visa-free countries has expanded to 86, with visa-free entry for citizens of 59 countries now extending beyond tourism to include business, medical, exhibition, and other diverse purposes.

Also, new policies include a 144-hour visa-free entry for foreign tour groups and a 15-day visa-free entry for foreign cruise tourists, as well as a 240-hour transit visa-free policy, covering various entry needs. Haikou and Sanya airports in Hainan are the designated entry ports for these policies.

The number of airport inspection channels has increased to 98, and a "group tourism port visa online processing" system has been introduced, allowing for "immediate reporting and processing," effectively ensuring smooth and safe port entry and exit.

Will the tax refund policy for overseas tourists shopping in Hainan change after the 'closure'?

Overseas tourists shopping at the "immediate tax refund" stores in Hainan Free Trade Port can sign an agreement and authorize a credit card pre-authorization. They can then receive an equivalent amount in RMB (also known as a prepayment) at the store for their tax refund items.

According to the agreement, the overseas tourist must leave China through a designated exit port within the specified time frame. Upon departure, the customs will verify and ensure that the tourist meets the tax refund requirements. The tax refund agency will then release the pre-authorization on the credit card and complete the tax refund process.

The departure tax refund and the offshore duty-free policies differ in terms of eligible individuals, shopping locations, types of taxes, and the tax refund process.

What's the difference between a departure tax refund and an offshore duty-free?

Offshore Duty-Free

• This applies only to Hainan Island. It applies to both domestic and foreign travelers (including Hainan residents) who leave Hainan but do not leave the country. They can buy duty-free goods in Hainan's duty-free shops or approved online sales platforms and enjoy exemptions from customs duties, import value-added tax and consumption taxes.

Departure Tax Refund

• This applies not only to Hainan but to other regions in China where the departure tax refund policy is implemented. It primarily targets foreigners and Hong Kong, Macau, and Taiwan residents who have stayed in China for no more than 183 days. After purchasing refundable items at tax refund stores, they can apply for value-added tax refunds at departure ports (such as airports, ports, or land ports).

Starting from November 1, 2025, all domestic and foreign travelers who are 18 years old or above, have purchased departure tickets (by air, train, or ship), and hold valid identification, can enjoy the offshore duty-free policy. They can purchase duty-free goods at duty-free shops or approved online sales platforms in Hainan.

In terms of taxes and the refund process, the departure tax refund only covers value-added tax. Overseas tourists can take the goods immediately after purchasing them from the refund stores and declare the tax refund items at customs. After verification, the tax refund agency at the exit port will handle the tax refund procedures.

In contrast, offshore duty-free goods are exempt from customs duties, import value-added tax, and consumption tax. Travelers can enjoy duty-free benefits within their shopping allowance without having to go through a refund process.

For amounts exceeding the allowance, travelers must handle the payment of taxes at the duty-free shops and pick up the goods at designated areas within the airport, train station, or port. Alternatively, they can choose from options like immediate pick-up, guarantee pick-up, mail delivery, or island return pick-up.

With these changes, Hainan Island may well become the new shopping paradise in the future.