China starts taxing lithium-ion batteries at 2%, solar cells next

China began collecting a 2% consumption tax on lithium-ion batteries on September 1, 2026. Announcement No. 20 of 2026, issued July 16 by the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration, applies the rate to lithium-ion, lithium primary, nickel-metal hydride, mercury-free primary, and all-vanadium flow batteries, and returns it to the statutory 4% from September 1, 2027.

The schedule taxes mature chemistries and spares emerging ones. Solar cells join the tax base at 2% from April 1, 2027, returning to the statutory 4% from April 1, 2028, while sodium-ion batteries, solid-state batteries, fuel cells, and perovskite, tandem, and gallium-arsenide solar cells are exempt through December 31, 2028. Claiming an exemption requires that the product meet its national standard, documented by a test report from an accredited laboratory. Huatai Securities described the exemptions as a clear policy tilt toward emerging technologies, according to pv magazine's ESS News.

ESS News reports that the tax authority has clarified the taxable boundary for stationary storage: cells and packs are taxable and clusters assembled from cells count as battery products, while a complete battery energy storage system with its electrical, thermal-management, fire-protection, and control equipment is classed as complete power equipment and is not taxed again. The result, in the outlet's words, is "not a straightforward 2% increase in the price of an entire BESS." Per ESS News, a State Taxation Administration clarification issued August 27 says semi-solid batteries do not qualify for the solid-state exemption. Before the final clarification, Shanghai Metals Market estimated a 2% rate would add around CNY 0.00648 per watt-hour (about $0.96 per kilowatt-hour) at the cell level, based on a lithium-ion cell price of CNY 0.324/Wh (about $48.21 per kilowatt-hour), with the final impact depending on where the boundary fell. Per the outlet, EVE Energy told customers that domestic lithium battery deliveries from September 1, 2026 would carry the added 2% consumption-tax cost. Batteries exported directly remain exempt from consumption tax, ESS News writes, which it distinguishes from the separate VAT export rebate for battery products, reduced from 9% to 6% in April 2026 and to be eliminated from January 1, 2027. Batteries entered China's consumption-tax regime in February 2015 at a statutory 4% rate, ESS News notes, with lithium-ion batteries, lithium primary batteries, nickel-metal hydride batteries, fuel cells, solar cells, and vanadium redox flow batteries exempted as support for emerging clean-energy industries.