Introduction
On July 16, 2026, China’s MOF, Customs, and State Tax Administration jointly released Announcement No. 20, revising consumption tax policy for battery products. This takes effect September 1, 2026, with key ramifications for manufacturers, importers, and exporters engaged with battery or PV cell technologies. (fgk.chinatax.gov.cn)
What’s Changing: Key Policy Highlights
- Battery products such as lithium-ion, lithium primary, nickel-hydride (“metal hydride”) and vanadium flow batteries will be taxed at 2% starting Sep 1, 2026, then increased to 4% from Sep 1, 2027. (fgk.chinatax.gov.cn)
- Photovoltaic (PV) panels taxed at 2% from April 1, 2027; 4% from April 1, 2028. (fgk.chinatax.gov.cn)
- Exemptions granted from Sep 1, 2026 to Dec 31, 2028 for sodium-ion, solid state, fuel cell batteries, and emerging types in PV (calcium titanate, perovskite, arsenide gallium). (fgk.chinatax.gov.cn)
Crucial Compliance & Reporting Requirements
- Detection reports & national standards: To get reduced or exempt rates, manufacturers must have certified detection reports confirming product compliance with national standards. For detection institutions, the CMA accreditation is required. (fgk.chinatax.gov.cn)
- Invoice & product coding: All battery sales must use the “battery” category in the official Goods & Services Tax classification system. (fgk.chinatax.gov.cn)
- Tax deduction (抵扣): For batteries already taxed, entering production of taxable battery products, manufacturers can deduct previously paid tax based on production lead usage, but must maintain a detailed Battery Tax Deduction Ledger (电池税款抵扣台账). (fgk.chinatax.gov.cn)
- Requiring specific invoices: Use VAT special invoices, tax payment documents, or imported tax payment certificates. Only invoices issued from September 1, 2026 or later are valid for deduction. (fgk.chinatax.gov.cn)
Exporting Considerations & Strategic Planning
- If exporting battery products or PV panels, check how consumption tax interacts with export rebate or refund policies—some products may lose preferential export status if taxed domestically.
- Consider manufacturing new product lines to fall under exempt battery types during the 2026–28 interim window (sodium-ion, perovskite etc.), provided you can ensure qualified detection and standard compliance.
- Timing matters: e.g., manufacturing or exporting just after rate changes could mean higher tax costs; planning inventory and billing dates will matter.
Sample Scenario
A lithium-ion battery manufacturer with a product meeting national standards:
- Sales in October 2026: Seller sells ¥10 million worth under “lithium-ion battery” code, obtains VAT special invoice. The consumption tax rate is 2%. Thus, consumption tax payable = ¥10,000,000 × 2% = ¥200,000.
- Any inventory sold after Sep 1, 2027 would use 4% rate unless in an exempt category.
Action Steps for Affected Entities
- Audit your product lines to map each battery/PV model against national standards and detection report eligibility.
- Set up processes for issuing correct invoices and maintaining ledgers and detection documentation, especially for deduction purposes.
- Forecast cost impacts under 2% → 4% rate increases; adjust pricing or supply chain contracts accordingly.
- Review export or supply contracts to ensure margins survive tax changes.
By proactively adapting to the upcoming battery consumption tax regime, manufacturers and exporters can avoid unexpected liabilities and optimize after-tax profitability.