China is set to phase out long-standing consumption tax exemptions for various photovoltaic cells and battery products, marking a significant shift in the nation’s industrial policy. Starting in September 2026, the government will gradually reintroduce taxes on these technologies, moving away from the incentives that fueled their rapid growth over the past decade. While standard PV cells and common battery types will face tiered tax rates, the government is maintaining specific exemptions for emerging technologies, such as perovskite and solid-state batteries, to ensure continued support for innovation and high-quality industrial development.
The Ministry of Finance, alongside customs and tax authorities, announced that the transition will be staggered to protect supply chain stability. For most battery types, including lithium-ion and nickel-metal hydride, a 2% tax rate will begin on 1 September 2026, doubling to 4% a year later. PV cells will follow a similar trajectory, with a 2% rate starting 1 April 2027, increasing to 4% by April 2028. This deliberate timeline is designed to allow manufacturers to adjust their operations and absorb costs following a period of intense market competition.
The policy change reflects the maturation of China’s renewable energy sector. Over the last ten years, the industry has achieved massive scale, with solar power costs dropping significantly and becoming competitive with coal-fired generation. Experts suggest that because these technologies have reached a level of global supply capacity and cost-effectiveness, the original rationale for tax exemptions has evolved. By reinstating these levies, authorities aim to curb low-end capacity and encourage further technological upgrading, aligning with broader national goals for energy efficiency and industrial health.
Despite the broader rollback, the government is carefully shielding cutting-edge research from the new tax regime. Technologies such as sodium-ion batteries, fuel cells, and advanced PV cells—including tandem and gallium arsenide varieties—will remain exempt through the end of 2028. This targeted approach is intended to foster innovation while transitioning the mature segments of the market toward standard taxation. The move complements other recent regulatory efforts, including new mandatory national standards for energy consumption and efficiency across the PV value chain, which are set to take effect in early 2027 to address industry oversupply.