Deal factsCountry: China · Technology: Batteries · Stage: Policy · Size: 2% tax rising to 4% in 2027 · Parties: Ministry of Finance, CATL, EVE Energy
China has started charging consumption tax on lithium-ion batteries again from 1 September 2026, ending an exemption that has been in place for 11 years. The initial rate is 2 per cent and it is scheduled to rise to the statutory 4 per cent on 1 September 2027. The change was set out in a July 2026 notice from the Ministry of Finance, the General Administration of Customs and the State Taxation Administration.
Batteries entered China’s consumption tax regime in February 2015 at a 4 per cent statutory rate, but lithium-ion products were exempted to support clean energy manufacturing. The reinstated tax applies to lithium-ion cells and packs, clusters assembled from cells, and lithium primary, nickel-metal hydride, mercury-free primary and vanadium flow batteries. Complete battery energy storage systems with electrical equipment, thermal management, fire protection and controls remain untaxed as complete power equipment. Sodium-ion batteries, solid-state batteries and fuel cells keep a temporary exemption through December 2028, although semi-solid batteries do not qualify.
For overseas buyers the export treatment is the critical detail. Batteries exported directly remain exempt from consumption tax, and manufacturers can claim refunds on eligible tax paid on purchased batteries that go into export products. That is separate from China’s VAT export rebate for batteries, which was cut from 9 per cent to 6 per cent in April 2026 and will be removed altogether on 1 January 2027. Solar cells face the same trajectory, with a consumption tax starting at 2 per cent in April 2027 and rising to 4 per cent the following year.
The domestic cost impact is modest. Shanghai Metals Market estimates that a 2 per cent tax adds around 0.00648 yuan per watt-hour, roughly $0.96 per kWh, at the cell level based on a cell price of 0.324 yuan per watt-hour. Huatai Securities puts the figure at about 0.008 yuan per watt-hour at 2 per cent and 0.016 yuan at 4 per cent, using a storage battery price of around 0.40 yuan per watt-hour, and calls the effect “manageable”. Producers have nonetheless moved on price: EVE Energy has told customers that domestic lithium products delivered from 1 September will carry the additional 2 per cent cost, Lishen Battery issued similar notices in August, and CATL raised its 314Ah storage cell price from 0.414 to 0.423 yuan per watt-hour on 1 August.
Why does this matter?
For buyers in Africa, Asia, the Middle East and Latin America, direct battery exports stay exempt, so the tax will not raise landed cell prices. The bigger signal is direction: Beijing is withdrawing support from mature clean technologies, and the end of the VAT export rebate in January 2027 will feed through to project budgets.
What happens next?
Three dates now matter for procurement teams: 1 January 2027, when the VAT export rebate for batteries disappears; April 2027, when solar cells begin to be taxed; and 1 September 2027, when the battery rate doubles to 4 per cent. Developers contracting for 2027 delivery should expect Chinese suppliers to seek price adjustments around each point, and the favourable treatment of sodium-ion and solid-state cells may bring them into export offers sooner.
Sources: pv magazine: China restores 2% lithium-ion battery tax after 11-year exemption
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