China Ends Its 11 Year Tax Exemption for Lithium-Ion Batteries

2026-07-30 | Calvin

The Ministry of Finance, the General Administration of Customs, and the State Taxation Administration recently issued a notice, specifying that starting from September 1, 2026, the consumption tax policy on certain battery products will be adjusted in stages.

China currently imposes a 4% consumption tax on batteries, a policy that has been in effect since February 2015. The policy concurrently stipulates that seven categories of batteries, including lithium primary batteries, lithium-ion batteries, and solar cells, are exempt from consumption tax.

According to the notice, this policy adjustment will restore consumption tax on some batteries in a phased and categorized manner. Effective September 1, 2026, a 2% consumption tax rate will be applied to mercury-free primary batteries, nickel-metal hydride batteries, lithium primary batteries, lithium-ion batteries, and all-vanadium flow batteries. From September 1, 2027, the rate will be increased to 4%. Starting April 1, 2027, a 2% consumption tax will be levied on photovoltaic cells (also known as solar cells), with the rate rising to 4% from April 1, 2028.

At the same time, certain new-technology batteries will enjoy consumption tax exemptions for a defined period. According to the notice, from September 1, 2026, to December 31, 2028, sodium-ion batteries, solid-state batteries, fuel cells, as well as perovskite cells, tandem cells, and gallium arsenide cells among photovoltaic cells, are exempt from consumption tax.

Industry insiders suggest that, overall, this policy adjustment aligns with the changing development landscape of China's battery industry. It is conducive to better leveraging the regulatory role of consumption tax, promoting resource conservation and environmental protection, and fostering the healthy and high-quality development of the battery industry, while driving technological progress and industrial upgrading.