China ends tax exemption for lithium-ion batteries
Consumption tax from September 1, 2026 – sodium-ion and solid-state batteries remain exempt.
China is ending the exemption from consumption tax for lithium-ion batteries that had been in place since 2015. The Ministry of Finance, the Customs Administration, and the State Taxation Administration jointly announced the change on July 17, 2026.
Affected products and tax rates
Effective September 1, 2026, a rate of 2% applies at the manufacturing or import stage. One year later, on September 1, 2027, the rate rises to 4%. The following are affected:
- Lithium-ion batteries
- Lithium primary batteries
- Mercury-free primary batteries
- Nickel-metal hydride batteries
- Vanadium redox flow batteries
For photovoltaic cells, a separate schedule applies: 2% from April 2027, 4% from April 2028.
Exemptions for new technologies
From September 1, 2026, to December 31, 2028, sodium-ion batteries, solid-state batteries, and fuel cells remain exempt from the consumption tax. The same applies to perovskite, tandem, and gallium arsenide cells in the photovoltaic sector.
Background
China has levied a 4% consumption tax on batteries since February 2015. Lithium-ion batteries, NiMH batteries, solar cells, and fuel cells were exempted at the time in order to promote energy conservation and environmental protection. This eleven-year exemption is now coming to an end. Observers view the change as a deliberate steering measure: established technologies are being taxed, while the next generation of cells receives preferential tax treatment.
Significance for European battery manufacturers
The tax applies at the Chinese manufacturing and import stage. Since Chinese consumption tax is generally not refunded on export, it can be expected to feed through to the FOB prices of Chinese cell manufacturers – on the order of up to 2% from September 2026, and up to 4% from September 2027.
For companies with ongoing framework agreements or series calculations, the following is recommended:
- Checking with cell suppliers whether and from when the tax will be factored into quoted prices
- Reviewing existing price commitments and price escalation clauses
- Assessing whether call-offs before September 1, 2026, make economic sense
- In the medium term: taking the tax exemption for sodium-ion and solid-state cells into account in technology evaluation