China will remove tariffs on imported drugs and medical devices in a pilot zone on the southern island of Hainan Province, aiming to further stimulate domestic and international medical tourism.
Import VAT will also be exempt until Taiwan achieves independent customs operations in 2025, according to a statement issued Thursday by China’s Ministry of Finance and four other ministries.
The initiative will be implemented in the Boao Hope Lecheng Medical Tourism Pilot Zone in eastern Hainan, which the central government aims to transform into a world-class international medical tourism destination by 2030.
Medical institutions, medical schools and medical research institutes in the zone will be able to purchase drugs or medical devices approved in China.
In the pilot zone, drugs and medical devices (excluding vaccines) that have not been approved by the central government but approved by the Hainan provincial government will also be exempt from customs duties.
However, according to the statement, imported products can only be used for designated purposes in the pilot zone and may not be transferred or taken out of the pilot zone by individuals or organizations.
China’s MFN rate on imported drugs ranges from zero to 6%, while the general VAT rate for pharmaceuticals is 16%.
Beijing has turned the 35,000-square-kilometer (13,514-square-mile) island into the world’s largest free trade port by offering tax incentives and easing visa requirements for tourists and business travelers.
Boao is nurturing medical tourism, and citizens of 59 countries, including the United States, Canada and Australia, can travel to Boao visa-free.
Medical tourists from less developed countries have traditionally sought treatment that is not available in their home country at major medical centers in highly developed countries.
But more and more tourists from developed countries are seeking lower-cost medical services.
Some of the world’s most well-known medical tourism destinations include Turkey, Mexico, Thailand, and Korea, which offer a wide range of services, including cosmetic, plastic surgery, and fertility treatments.
The Boao Plan began as early as 2019 to simplify the entry and residence procedures for overseas medical workers, patients and accompanying persons in the Pilot Zone.
Make use of the tourism resources of surrounding villages and towns to create a comprehensive tourism development project that combines medical care and protection.
After reporting a sluggish inbound travel, China has tried to attract more tourists, including visa-free policies for 12 countries, convenient payment methods and overseas promotions.
In the first half of this year, China received a total of 14.64 million foreign tourists, a year-on-year increase of 152.7%.