- China will resume consumption tax on lithium-ion and other mature batteries, phased to 2% Sept 1, 2026 and 4% by Sept 1, 2027.
- Sodium-ion, solid-state, fuel cells and next-gen PV techs stay tax-exempt through Dec 31, 2028 to spur innovation.
- Tax credits, standards-based certification, and phased timing aim to cushion industry adjustment and push tech upgrades.
On July 17, China’s Ministry of Finance, General Administration of Customs and State Taxation Administration jointly released a notice adjusting the country’s consumption tax policy for certain battery products.
Under the new policy, China will resume levying consumption tax on certain battery products, including lithium-ion batteries, while continuing temporary tax exemptions for next-generation battery technologies such as sodium-ion and solid-state batteries.
China currently imposes a 4% consumption tax on batteries, a policy that has been in place since February 2015.
Previous regulations exempted seven categories of batteries from the consumption tax, including primary lithium batteries, lithium-ion batteries and photovoltaic (solar) cells.
The latest adjustment marks a shift away from the long-standing blanket tax exemption toward a differentiated tax regime.
According to the notice, effective Sept. 1, 2026, mercury-free primary batteries, nickel-metal hydride (NiMH) batteries, primary lithium batteries, lithium-ion batteries and vanadium redox flow batteries will be subject to a 2% consumption tax. The rate will return to 4% beginning Sept. 1, 2027.
Photovoltaic cells, also referred to as solar cells, will follow a separate timetable. A 2% consumption tax will take effect on April 1, 2027, before returning to the standard 4% rate on April 1, 2028.
At the same time, several emerging battery technologies will continue to enjoy temporary tax exemptions.
From Sept. 1, 2026 through Dec. 31, 2028, sodium-ion batteries, solid-state batteries, fuel cells, and next-generation photovoltaic technologies including perovskite, tandem and gallium arsenide solar cells will remain exempt from consumption tax.
Products eligible for preferential tax treatment must comply with national standards and obtain certification reports issued by CMA-accredited testing institutions.
Consumption tax already paid during the continuous production of taxable battery products will also be creditable under the law to prevent double taxation.
From a policy perspective, the phased implementation provides companies with a relatively long adjustment period while continuing to offer tax incentives for innovative battery technologies, encouraging industrial upgrading.
Notably, this is the second adjustment to China’s new energy vehicle-related tax policies this month.
Earlier regulations announced that, beginning Jan. 1, 2027, the 50% reduction in vehicle and vessel tax for energy-efficient vehicles will be abolished.
Tax exemptions for battery-electric commercial vehicles, plug-in hybrid (including extended-range) commercial vehicles and fuel-cell commercial vehicles will also be phased out.
As China’s NEV and power battery industries enter a new stage of development, tax policies are shifting from broad-based support toward differentiated incentives that encourage technological advancement.
While restoring consumption tax on mature battery products, the latest policy continues tax exemptions for next-generation technologies such as sodium-ion and solid-state batteries, signaling continued policy support for higher-performance and more resource-efficient battery technologies.
Discover more from ChinaEVHome
Subscribe to get the latest posts sent to your email.
