I. Announcement on Stamp Duty Policies Regarding Corporate Restructuring, Reorganization and Institutional Reform (Announcement No. 14 [2024] by the Ministry of Finance and the State Taxation Administration)

To support corporate restructuring, reorganization and institutional reform, further stimulate the intrinsic drive and innovative vitality of various market entities, and promote high-quality economic and social development, the following stamp duty policies are announced:

1.Stamp Duty on Business Account Books

(1) For newly established enterprises formed during corporate restructuring, reorganization or institutional reform, the paid-in capital (share capital) and total capital reserves recorded in their newly opened business account books shall be exempt from further stamp duty for the portion that has already been taxed. The unpaid portion and any subsequent increases must be taxed as prescribed.

(2) Increases in paid-in capital (share capital) and total capital reserves resulting from debt-to-equity conversions are subject to stamp duty. However, such increases in restructuring projects approved by the State Council are ex

empt.

(3) Increases in paid-in capital (share capital) and total capital reserves resulting from asset revaluation during corporate restructuring, reorganization and institutional reform shall be subject to stamp duty as stipulated.

(4) Funds recorded under other accounting items that are converted into paid-in capital (share capital) or capital reserves shall be subject to stamp duty.

2.Stamp Duty on Taxable Contracts

For taxable contracts executed before but not yet fulfilled at the time of corporate restructuring, reorganization or institutional reform, stamp duty already paid on such contracts shall not be levied again if the successor entity assumes all rights and obligations without altering the original basis of tax.

3. Stamp Duty on Property Transfer Documents

Stamp duty exemptions apply to property transfer documents executed in connection with:

● Corporate restructuring, mergers, demergers, liquidation or institutional reform;

● Administrative adjustments made by the people's governments at or above the county level, or their affiliated departments responsible for managing state-owned assets, regarding the ownership of land use rights, buildings and structures, as well as equity shares, in accordance with regulations;

● Transfers of ownership of land use rights, buildings, structures, or equity within the same investment entity

4.Scope of Policy Application.

(1) Corporate Restructuring: Includes the conversion of non-corporate enterprises into limited liability companies or joint-stock companies, the transformation of limited liability companies into joint-stock companies, and vice versa. The original investment entity must hold more than 75% of shares after restructuring and the new company must assume the original rights and obligations.

(2) Corporate Reorganization: Includes mergers, demergers, equity or asset contributions and transfer, debt restructurings, etc.

Merger: Combining two or more companies into a single entity with the original investors remaining. This includes mergers between a parent company and its wholly owned subsidiaries.

Demerger: Splitting a company into two or more entities with the same original investment entities.

(3) Continued Existence of Investment Entities: Original investors must remain in the restructured or reorganized entity, though their investment proportions may change.

(4) Same Investment Entity: Investors remain unchanged after demergers, with possible changes in their investment proportions.

(5) Institutional Reform: Transformation of public institutions into enterprises in accordance with relevant national regulations, where the original investor (including entities performed the duties of state-owned asset investors) holds more than 50% of shares (or equity) in the resulting enterprise.

(6) Transfers within the Same Investment Entity: Includes transfers between a parent company and its wholly-owned subsidiaries, between subsidiaries under the same company, or between individuals and their sole proprietorships, single-member limited liability companies, or individual businesses.

(7) Definition of Enterprises and Companies: Refers to entities established under Chinese laws and regulations and registered in China.This announcement shall take effect on October 1, 2024, and remain valid until December 31, 2027. The “Announcement on Stamp Duty Policies Regarding Corporate Restructuring (Announcement No. 183 [2003] by the Ministry of Finance and the State Taxation Administration)” is simultaneously repealed.

Ministry of Finance & State Taxation Administration

August 27, 2024

II. Notice on the "Zero Tariff" Policy for Pharmaceuticals and Medical Devices in Hainan Free Trade Port by Ministry of Finance, National Health Commission, General Administration of Customs, State Taxation Administration and National Medical Products Administration (Finance, Customs and Taxation No. 21 [2024])

To Hainan Provincial Government, Haikou Customs, and the Hainan Provincial Taxation Bureau of the State Taxation Administration:

To support the development of the Hainan Free Trade Port, expand the scope of "zero tariff" goods, and enhance pressure testing for closed-off operation, the "zero tariff" policy for pharmaceuticals and medical devices is announced as follows with the approval of the State Council:

1.Exemption from Import Duties and Import VAT

Before the full implementation of closed-off operations in Hainan, independently registered legal entities located in the Hainan Boao Lecheng International Medical Tourism Pilot Zone (hereinafter referred to as the "Pilot Zone") that have been recognized as eligible entities, including medical institutions, higher education institutions for medical education, and pharmaceutical research institutes, may import pharmaceuticals and medical devices specified in Article 3 of this notice and use them under the provisions of this policy without paying import duties or import-stage value-added tax (VAT).

Eligible entities that voluntarily pay import-stage VAT may apply for exemption when completing relevant procedures.

2. Recognition of Eligible Entities

The list of eligible entities shall be determined by the Pilot Zone Administration in coordination with Hainan provincial departments of health, drug regulation, education, science and technology, finance, Haikou Customs, and the Hainan Provincial Taxation Bureau. The list shall be dynamically adjusted and communicated to Haikou Customs and the Hainan Provincial Taxation Bureau.

3. Scope of Duty-Free Pharmaceuticals and Medical Devices

Pharmaceuticals and medical devices exempt from import duties and import-stage VAT (hereinafter referred to as "duty-free pharmaceuticals and medical devices") include:

1.Import pharmaceuticals and medical devices already approved for registration in China;

2.Specially approved pharmaceuticals (excluding vaccines) and medical devices that are not yet approved for registration in China but are permitted for import and use in the Pilot Zone by the Hainan Provincial Government according to relevant regulations by State Council (hereinafter referred to as “specially approved pharmaceuticals and medical devices”).

4. Import Procedures

Before importing duty-free pharmaceuticals and medical devices, eligible entities must have each batch verified by the Pilot Zone Administration and the Hainan Provincial Drug Administration to confirm compliance with this policy. The verified information shall be forwarded to the customs and tax authorities in the entity's location.

Applications for duty-free import must be filed with customs by the eligible entities, and the Pilot Zone Administration shall manage these pharmaceuticals and devices according to existing special-use regulations. All relevant data must be uploaded to the Pilot Zone traceability platform for end-to-end regulatory oversight.

5. Restrictions on Use

Duty-free pharmaceuticals and medical devices imported by eligible medical education institutions and pharmaceutical research institutes are limited to self-use within the Pilot Zone.

6. Sales Regulations

Medical institutions may sell duty-free pharmaceuticals and medical devices to patients treated on-site, based on prescriptions or medical orders issued by their physicians. Sales must comply with clinical needs and prescription management regulations. Taxes on such sales shall be applied according to domestic tax policies. Duty-free items shall not be transferred to individuals outside these contexts.

7. Customs Supervision

Duty-free pharmaceuticals and medical devices imported by eligible entities shall be subject to customs supervision within the regulatory period. After such items are sold to patients under valid prescriptions, customs will not conduct further post-sale supervision.

8. Patient Use Requirements

Patients must use duty-free pharmaceuticals and medical devices obtained from medical institutions for personal use only within the Pilot Zone. Resale, removal, or mailing of these items outside the Pilot Zone is prohibited.

9. Transfers Due to Objective Reasons

If an eligible entity needs to transfer duty-free pharmaceuticals or medical devices due to objective reasons, prior approval from relevant authorities in Hainan Province is required. For items within the customs regulatory period, import duties and VAT must be paid to customs before the transfer.

Violations, including unauthorized transfers or resale by patients, shall be rectified by the Pilot Zone Administration, with recovery measures implemented where possible. Domestic VAT shall apply to such transactions.

10. Management Measures

The Hainan Provincial Government shall take primary responsibility for implementing this policy and, in consultation with relevant national authorities, issue detailed management measures. These measures shall specify eligibility determination procedures, usage requirements for duty-free items, and penalties for misuse or violations. The management regulations shall be issued and implemented simultaneously with this notice.

11. Monitoring and Reporting

Hainan Province shall regularly review the import, sale, and use of duty-free pharmaceuticals and medical devices, strengthen the management and supervision of eligible entities in the use and disposal of duty-free pharmaceuticals and medical devices (including prescriptions or medical orders issued by the physicians of medical institutions), and promptly investigate any violations. Quarterly reports shall be submitted to the issuing authorities of this notice, including basic information of eligible entities, duty-free pharmaceuticals and medical devices imported and sold by each entity, and tax exemptions data.

Relevant departments of Hainan Province shall carry out necessary technical system upgrades to improve the functionality of traceability management platform. Meanwhile information interoperability shall be enhanced to share data of eligible entities, patients, duty-free pharmaceuticals and medical devices.

12. Supervision and Compliance

The Hainan Provincial Government shall strengthen supervision to prevent violations and report any incidents promptly.

13. Penalties for Violations

Violations involving resale, proxy purchase, or smuggling of duty-free items shall be dealt with by customs in accordance with regulations and incorporated into the credit record by the Pilot Zone Administration. Patients violating provisions will face a three-year prohibition on purchasing duty-free items. Criminal liability shall be pursued where applicable.

14. Violations by Entities or Physicians

Eligible entities and physicians misusing duty-free items shall be penalized according to regulations. Entities subject to criminal prosecution will lose eligibility for this policy, with relevant information communicated to Haikou Customs and Hainan Provincial Taxation Bureau.

15. Implementation Scope

This notice applies exclusively to the Hainan Boao Lecheng International Medical Tourism Pilot Zone and takes effect upon publication.

Ministry of Finance, National Health Commission, General Administration of Customs, State Taxation Administration, National Medical Products Administration

September 2024

III. Announcement by the Customs Tariff Commission of the State Council on Granting Zero-Tariff Treatment for 100% of Tariff Lines from Least Developed Countries (Tax Commission Announcement No. 9 [2024])

To promote unilateral openness toward least developed countries (LDCs) and achieve shared development, starting from December 1, 2024, China will apply a zero-tariff preferential rate to 100% of tariff lines for goods originating from LDCs that have established diplomatic relations with China. For tariff quota goods, only the within-quota tariff rate will be reduced to zero, while the out-of-quota tariff rate will remain unchanged.

Customs Tariff Commission of the State Council

September 11, 2024