New policy for three departments takes effect: Lithium batteries and photovoltaic cells gradually resume taxation, while new types of batteries enjoy tax exempt

On July 16th, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration jointly issued Announcement No. 20 of 2026, officially finalizing the phased adjustment plan for battery consumption tax. The entire policy will be implemented in multiple stages starting from September 1st, 2026, covering all categories of lithium batteries, photovoltaic batteries, energy storage batteries, and new solid-state/natrium-ion batteries. This will have a tangible impact on the new energy industry chain, battery manufacturers, and photovoltaic enterprises.

Many people are not aware that China introduced the battery consumption tax system as early as 2015, with a fixed base tax rate of 4%. In order to support the start of the new energy industry, lithium batteries, photovoltaic batteries, and vanadium liquid flow energy storage batteries were all exempt from consumption tax that year, and this preferential policy lasted for 11 years. Now that China's lithium battery and photovoltaic industries have global leading capacity, the problem of homogeneity and low-price internal competition is prominent. The policy has undergone a major shift and no longer applies a blanket tax exemption but instead follows a differentiated approach of "gradually taxing mature products and providing long-term tax exemption for cutting-edge technologies", leaving enterprises sufficient buffer periods to avoid sudden tax increases that could impact operations.

1. Taxation schedule by stages, two types of mature batteries follow different paces

The entire policy is divided into two taxation echelons, with clear timeframes, and production and export enterprises must remember them.

The first echelon: lithium-ion batteries, lithium primary batteries, nickel-metal hydride batteries, mercury-free dry batteries, all vanadium liquid flow energy storage batteries

September 1st, 2026 - August 31st, 2027: transitional period with a low tax rate of 2%;

September 1st, 2027 onwards: direct restoration of the base tax rate of 4%, permanently implemented.

In simple terms, in just over a month, electric vehicle battery power supplies, digital lithium batteries, and energy storage vanadium batteries will start paying taxes. In the first year, only half of the tax will be collected, giving manufacturers one year to absorb costs and adjust quotations.

The second echelon: photovoltaic solar batteries. The policy specifically delays the taxation period to accommodate the current situation where the photovoltaic industry has just emerged from a price war and is gradually recovering

April 1st, 2027 - March 31st, 2028: taxed at 2%;

April 1st, 2028 onwards: raised to the standard tax rate of 4%.

Compared to lithium batteries, photovoltaic batteries have a larger buffer period of more than half a year. Enterprises have more time to adjust production capacity and optimize cost structure, reducing the operational pressure caused by tax burdens.

2. Heavy bonus! 6 types of new batteries enjoy full tax exemption for over two years

The key support direction of the new policy is all aimed at the next-generation cutting-edge energy storage and battery technologies. The tax exemption window period is as long as 2 years and 4 months: from September 1st, 2026 to December 31st, 2028. The following products are completely exempt from consumption tax:

sodium-ion batteries, solid-state batteries, hydrogen fuel cells; calcium phosphate batteries, tandem batteries, gallium arsenide batteries in the photovoltaic sector.

Industry experts interpret that this is a tax tool used by the state to directly support innovation. Currently, sodium-ion and solid-state batteries are still in the early stages of industrialization, with large production line investments and relatively high unit costs. The 4% tax exemption can directly reduce research and production costs, and small and medium-sized enterprises can also be more confident in investing in technological research. In contrast, the traditional lithium battery industry has a serious overcapacity problem, and an increase in tax costs will force low-end and backward production capacity to exit the market, accelerating industry consolidation and resources concentrating in the hands of leading enterprises with advanced technologies.

3. Enjoying tax exemption has strict requirements, and deduction rules are updated simultaneously

Not all production of corresponding categories can automatically enjoy tax exemption. The official has set clear review requirements: all applications for tax exemption of batteries must comply with the corresponding product standards of the country; Before filing the application, a compliance report issued by a CMA-certified testing institution must be provided. Products without national standards or those that fail the tests cannot enjoy tax exemption benefits. They must pay the full tax amount.

At the same time, the new policy improves the deduction mechanism to prevent enterprises from paying taxes repeatedly. Factories that purchase battery raw materials already subject to consumption tax and use them for further processing to produce finished batteries can deduct the previously paid taxes based on the actual quantity used; self-produced batteries that are internally transferred for processing do not need to pay taxes. Only when they are sold externally or transferred to non-production processes are consumption taxes declared. This significantly reduces the burden on mid-to-lower-tier manufacturing enterprises.

Four. What changes will occur in the industrial chain after the policy implementation?

Small and low-end battery factories will face greater survival pressure.

Many second- and third-tier lithium battery manufacturers have a net profit margin of only 3%-6%, and the 2%-4% consumption tax will directly squeeze their profit margins. Factories lacking scale and without technical barriers will have difficulty absorbing the new costs. They may either raise prices and lose orders or compress profits and operate at a loss. The elimination of the industry will accelerate. Headline large factories rely on their huge production capacity and the bargaining power of raw materials upstream to pass on some of the tax burden to downstream automakers and energy storage customers. They will be less affected.

Sodium-ion and solid-state batteries are entering a golden period of development.

The combined effect of two years of tax exemption benefits and the sudden increase in market demand will lead to a continuous rise in investment enthusiasm in the sodium battery storage and solid-state vehicle battery sectors. Relevant material and equipment enterprises will also benefit simultaneously, accelerating the process of new technologies replacing traditional lithium batteries.

The short-term cost of the photovoltaic industry will slightly increase, but it will be beneficial in the long term for fair competition.

Postponing the tax collection gives photovoltaic module enterprises time to adjust. Small enterprises that engage in continuous low-price competition will gradually be eliminated. The industry will move away from a simple price war and shift to the research and development of high-efficiency battery technologies, promoting the high-quality development of the photovoltaic industry.

Five. Is it necessary for ordinary people to care about this?

In the short term, the terminal prices of electric vehicles, household energy storage power supplies, and photovoltaic panels are likely to increase slightly, but the increase will be limited. Leading enterprises will use large-scale production and optimizing internal costs to offset the impact of taxes and will not experience significant price hikes. In the long term, tax policies will guide the industry to accelerate technological iteration. After the widespread use of next-generation low-cost and high-security sodium-ion and solid-state batteries, the prices of new energy products may stabilize or even decrease.

Conclusion

This battery consumption tax adjustment is not a simple increase in taxes. It is a complete industrial guidance plan: Mature sectors gradually withdraw tax exemption benefits to resolve overcapacity; Frontier innovation sectors receive long-term tax reduction support to seize the global battery technology leadership position. All battery and photovoltaic practitioners are advised to review their product types and tax timelines, plan production costs, product quotations, and research and development layouts in advance, and smoothly cope with the industry changes brought about by the implementation of the new policy.