The preferential consumption tax policy for batteries, in place for more than a decade, is undergoing a major overhaul. On July 17, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration issued an announcement stating that, effective September 1, 2026, the consumption tax regime for certain battery products will be gradually adjusted.
According to the announcement, this adjustment entails three major changes:
       First, consumption tax will be gradually reimposed on certain types of batteries.
Effective September 1, 2026, a consumption tax at a rate of 2% will be imposed on mercury-free primary batteries, nickel–metal hydride storage batteries, lithium primary batteries, lithium-ion storage batteries, and all-vanadium redox flow batteries; effective September 1, 2027, the consumption tax rate will be increased to 4%.
Effective April 1, 2027, a consumption tax of 2% will be imposed on photovoltaic cells; effective April 1, 2028, the consumption tax rate will be increased to 4%.
   Second, certain categories will continue to enjoy duty-free treatment.
Until December 31, 2028, consumption tax will continue to be exempted on perovskite solar cells, tandem solar cells, and gallium arsenide solar cells used in fuel cells and photovoltaic systems.
Third, new categories of goods have been added to the temporary tax exemption list.
From September 1, 2026, to December 31, 2028, sodium-ion batteries and solid-state batteries will be exempt from the consumption tax. It should be noted that battery products eligible for this tax exemption must comply with the relevant national standards.
Since February 1, 2015, China has imposed an excise tax on batteries at the production, commissioned processing, and import stages, with a tax rate of 4%. At the same time, excise tax is exempted for seven categories of batteries, including mercury-free primary batteries, nickel–metal hydride storage batteries, lithium primary batteries, lithium-ion storage batteries, solar cells, fuel cells, and all-vanadium redox flow batteries.
Liang Ji, Director of the Center for Public Revenue Research at the Chinese Academy of Fiscal Sciences, stated that since the policy’s implementation, it has played a positive role in promoting the green and low-carbon development of the battery industry and guiding technological innovation and upgrading. At present, China has established a battery industry system that boasts the world’s largest production capacity, the most complete industrial chain, and the strongest global competitiveness. Compared with the situation at the time the policy was first introduced, the battery sector has undergone significant changes, with new technologies and products emerging continuously. To better adapt to the new circumstances, challenges, and trends facing the battery industry, it is necessary to leverage the regulatory and guiding functions of the consumption tax to facilitate the industry’s structural upgrade.
This adjustment to the battery product policy is not a sudden, drastic change; rather, it will be implemented in stages, with a one-year transition period. Initially, a 2% tax rate will apply, after which the rate will revert to 4% one year later.
Shi Zhengwen, Director of the Center for Fiscal and Tax Law at China University of Political Science and Law, stated that this measure fully takes into account the realities of corporate production and operations as well as supply-chain stability. By adopting a scientifically designed timetable and a graduated tax-rate structure, it aims to mitigate the impact on industries, enabling enterprises to better absorb cost increases and facilitating adjustments to their production and business strategies. In particular, recognizing that the photovoltaic sector is currently in a phase of gradual stabilization and recovery following comprehensive efforts to address “involutionary” competition, the measure has appropriately postponed the resumption of tariffs on photovoltaic cells, providing companies with additional time to adjust.
According to experts, this adjustment adopts a strategy of tailored measures implemented in phases, balancing short-term stability with long-term industrial development. It sends a positive signal encouraging technological innovation and guiding the industry’s transformation and upgrading, and holds significant implications for curbing “involutionary” competition and fostering the healthy, high-quality growth of the battery sector.
The core of the policy is to channel capital and technology toward enterprises with strong innovation capabilities and distinct competitive advantages, while simultaneously accelerating the exit of outdated, low‑end firms that rely on “involution” for survival. This approach aims to smooth the competitive landscape and ensure the steady, long‑term development of the battery sector and related industries.
Moreover, experts point out that tax incentives are inherently temporary and, in essence, operate under a “sunset clause.” This also underscores the principle underlying the development of a unified national market: enterprises should not rely on tax incentives over the long term, and all products and industries ought to compete under uniform, fair rules, allowing factors of production to be fully mobilized and allocated in the market.