China's Three Ministries Announce Revised Consumption Tax Policy for Battery Products, Including Solar Cells

Authorities have issued a new consumption tax policy for various battery types. Starting September 1, 2026, a 2% consumption tax will be levied on mercury-free primary batteries, metal hydride nickel batteries (also known as nickel-metal hydride batteries), lithium primary batteries, lithium-ion batteries, and all-vanadium redox flow batteries. This rate will increase to 4% starting September 1, 2027.

For photovoltaic cells (also known as solar cells), a 2% consumption tax will be applied from April 1, 2027, which will then rise to 4% from April 1, 2028.

A tax exemption period has been established for several emerging battery technologies. From September 1, 2026, to December 31, 2028, sodium-ion batteries, solid-state batteries, fuel cells, and specific types of photovoltaic cells—namely perovskite, tandem, and gallium arsenide cells—will be exempt from the consumption tax.

To qualify for these tax reductions or exemptions, manufacturers and processors must ensure their battery products comply with relevant national standards. Products that do not meet these standards or for which no national standard exists are ineligible for the tax benefits. Companies must obtain a conformity test report from an accredited inspection body before their first tax declaration for the relevant battery products.

The policy also includes provisions for tax credits. When taxpayers purchase, commission the processing of, or directly import battery products on which consumption tax has already been paid, and use them as raw materials for the continuous production of taxable battery products, they are permitted to deduct the tax already paid on those materials based on the quantity used in production.

For battery products manufactured and used internally, no consumption tax is payable if they are used for the continuous production of other taxable battery products. However, tax must be declared and paid upon transfer if the products are used for manufacturing non-battery items or for other purposes.

All other matters concerning the administration of the battery consumption tax will continue to be handled in accordance with existing regulations, including the Interim Regulations of the People's Republic of China on Consumption Tax and their implementing rules. This new announcement supersedes any previous conflicting provisions in earlier tax notices related to batteries and coatings.