China's Ministry of Finance and State Taxation Administration have announced an extension of the stamp tax exemption policy for offshore trade, broadening its coverage to six additional free trade zones starting April 1, 2025.

The policy, initially piloted in Shanghai, has now expanded to FTZs in Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, and Hainan provinces, aiming to drive innovation and foster high-quality development in the offshore trade sector.

Launched on April 1, 2024 as a trial in the China (Shanghai) Pilot Free Trade Zone and the Lin-gang Special Area, the policy has already delivered tangible results. According to the Shanghai Municipal Tax Service of the State Taxation Administration, it has reduced stamp duties by a total of 182 million yuan ($25 million) over the past year, benefiting 377 enterprises across strategic sectors such as energy, electronics, and medical equipment.

The policy has also lowered operational costs and attracted foreign businesses, with foreign firms accounting for 57 percent of beneficiaries and receiving the majority of the tax relief, highlighting its role in boosting trade and investment confidence.

Offshore trade, which involves transactions where goods bypass China and are shipped directly between international buyers and sellers, typically incurs a 0.03-percent stamp tax on both procurement and sales contracts under Chinese law. The exemption eliminates this dual levy, significantly lowering operational costs and improving cash flow efficiency for businesses.

The success of the Shanghai pilot has provided a replicable model for national implementation, aligning with broader efforts to enhance China's global trade competitiveness.

Source: Shanghai Observer