The Changes: Battery Consumption Tax Policy Update
- From September 1, 2026, China will impose a 2% consumption tax on certain batteries: mercury-free primary batteries, metal hydride nickel (nickel-metal hydride), lithium primary, lithium-ion, and vanadium redox flow batteries. (szs.mof.gov.cn)
- Starting September 1, 2027, tax rate for those batteries increases to 4%. (szs.mof.gov.cn)
- For photovoltaic batteries, from April 1, 2027, they’ll face 2%, increasing to 4% from April 1, 2028. (szs.mof.gov.cn)
- Several battery technologies and types will be exempt from Sept 1, 2026 to Dec 31, 2028: sodium-ion, solid-state, fuel cell, perovskite, tandem, and gallium arsenide batteries – provided they meet national standards. (szs.mof.gov.cn)
Compliance Requirements: What Organizations Must Do
- Standard certification: To qualify for exemption or reduced tax, products must conform to national standards and have a detection report from a CMA-accredited agency. (szs.mof.gov.cn)
- Importer/manufacturer coordination: Imported battery products must be identified by imported tax schedule entries and be declared at correct rate. Domestic production must meet the same requirements.
- Record keeping: Maintain test reports, traceability of batches, import documentation, and processing/production for any claimed tax preference.
- Switching rate schedule awareness: The staged increases (from 2% to 4%) require planning for cost pricing, logistics, and cash flows.
Impacts and Example Cases
- Renewable energy firms using large-scale battery storage: increased costs starting in Sept 2026 for primary/ion batteries; may consider procuring and inventorying ahead.
- PV module integrators using PV batteries: should plan ahead for April 2027 rate change.
- Manufacturers of exempt battery types need to ensure strong compliance to ensure eligibility.
Practical Steps to Ensure Compliance
- Audit current supply chain to identify which battery types your products use.
- Liaise with suppliers to confirm whether batteries have the required national standard and CMA certificate.
- Adjust pricing models to account for increased consumption tax.
- For companies pushing new battery technologies, document testing and standards – this could be critical in regulatory audits.
Why It Matters
This policy aligns tax policy with environmental and industrial policy goals: encouraging innovation in advanced battery technology, but phasing out preferential tax treatment for mature battery categories. Producers that fail to meet compliance requirements may lose tax benefits or face penalties.