Article 1  Before March 1st of each year, airline companies and airport enterprises shall submit to the original tax collecting organization proof documents (eg. Tax Declaration Form, Tax Paid Certificate, etc.) on business tax paid in Hainan in the previous year for service of international, Hong Kong, Macao and Taiwan flights to/from/via Hainan. Upon confirmation by Hainan Provincial Local Tax Bureau, the Finance Bureau of Hainan Province shall provide subsidies as per the actual sum of tax collected.

Article 2  Before March 1st of each year, sales agents of air cargo transport, warehousing enterprises and express-mail service enterprises shall submit to the original tax collecting organization proof documents (eg. cargo list, mail list, sales agency contract, agency revenue invoice, certificate on tax paid, etc.) on business tax paid in Hainan during the previous year for service of international, Hong Kong, Macao and Taiwan flights to/from/via Hainan. Upon confirmation by Hainan Provincial Local Tax Bureau, the Finance Bureau of Hainan Province shall provide subsidies as per the actual sum of tax collected.

Article 3  Financial subsidies for new international, Hong Kong, Macao and Taiwan passenger flights to/from/via Hainan shall be provided to airline companies and charters twice a year. In case of a charter flight, the charter shall own the total financial subsidies. The financial subsidies for newly-opened international, Hong Kong, Macao and Taiwan flight routes shall be provided for three years, starting from the initial use of the new flight route. The financial subsidy standards for the first, second and third year are 100%, 75% and 50% respectively (Refer to Annex to find out financial subsidies). In principle, no financial subsidies shall be offered if the operation of the international, Hong Kong, Macao and Taiwan flight routes is more than three years. Those which need special support can apply for the extension of financial subsidy, which is based on 50% of subsidy standard. The Office of Joint Leading Team of Trial Opening of Aviation Rights in Hainan, Hainan Provincial Tourism Bureau and the Office of Hainan Coast Defense and Port Affairs shall be formed into a group to review the financial subsidies for the opening of aviation right. The Group is responsible for reviewing the financial subsidies applied for by each department, and the subsidies shall be provided after the cross-check of the Finance Bureau of Hainan Province. The airline companies and charters shall submit the first half year’s and the second half year’s related documents of the international, Hong Kong, Macao and Taiwan flights to/from/via Hainan (subsidy application, charter flight contract, account information, etc.) to the Group before July 15 of the year and January 15 of the following year respectively.

Article 4 The financial subsidies for newly-opened international, Hong Kong, Macao and Taiwan cargo flight routes shall be provided for three years, starting from the initial use of the new flight route. The first year’s financial subsidy for the airline companies and charters in Hainan is as follows: cargo gross weight (ton) transported by each cargo flight x RMB600 yuan/ton. The second year’s subsidy is: cargo gross weight (ton) transported by each cargo flight x RMB600 yuan/ton x 75%; and the third year’s subsidy is: cargo gross weight (ton) transported by each cargo flight x RMB600 yuan/ton x 50%.  The first year’s financial subsidy for the airline companies and charters out of Hainan is as follows: cargo gross weight (ton) transported by each cargo flight x RMB400 yuan/ton. The second year’s subsidy is: cargo gross weight (ton) transported by each cargo flight x RMB400 yuan/ton x 75%; and the third year’s subsidy is: cargo gross weight (ton) transported by each cargo flight x RMB400 yuan/ton x 50%. In case of a charter flight, the charter shall own the total financial subsidies. The airline companies and charters shall submit previous year’s related documents of the international, Hong Kong, Macao and Taiwan flights to/from/via Hainan (general application form, charter flight contract, account information, etc.) to the Group before January 15 of each year. The Group is responsible for reviewing the financial subsidies applied for by each department, and the subsidies shall be provided after the cross-check of the Finance Bureau of Hainan Province.

Article 5  When sales agents of air cargo transport service, warehousing enterprises and express-mail service businesses newly build cargo stations and warehouses in service of international, Hong Kong, Macao and Taiwan flights to/from Hainan, such enterprises shall receive subsidy from the administration of finance at the provincial/municipal level for the land lease fees paid (ie. the part retained by local administration after extraction of compensation charge such as land compensation fees, relocation subsidy, young crops compensation fees and housing compensation fees as well as utilization charge for new construction land or idle construction land). The above-mentioned enterprises shall receive subsidy from the administration of finance at the provincial/municipal level as per the actual sum paid for the locally-retained part of construction fees, including urban facilities fees, building quality supervision fees, project measurement fees, timber compensation fees, relocation compensation fees and forest vegetation recovery fees, etc.

Article 6  Before starting the above-mentioned business, the enterprises concerned shall submit photocopies of business licenses and operation permits and other related documents to Hainan Aviation Rights Office for record. Such enterprises shall keep accounting of the transport revenues from international, Hong Kong, Macao and Taiwan flights operated in Hainan, revenues from arrival/departure/transiting service as well as revenues from cargo transport sales agency, warehousing service and express-mail service separately from other categories of revenues. Application for income tax should also be separately processed.

The above-mentioned enterprises shall report to the Hainan Aviation Rights Office and the Provincial Department of Finance the estimated sum of financial subsidies payable for the current year prior to the date of October 31st of the year. As per the current tax-sharing system, the subsidies for business tax which should be paid by Haikou and Sanya local governments shall be submitted to the Provincial Department of Finance at the year-end.

Article 7 The period of validity of these detailed regulations is from January 1st, 2008 to December 31st, 2012. The Detailed Rules and Regulations on Opening of Aviation Rights in Hainan (Document No.: QFB〔2006〕No. 3) promulgated on January 12th, 2006 shall cease to be effective. The Hainan Aviation Rights Office shall interpret these regulations