What’s Changed and Why It Matters
In July 2026, China’s Ministry of Finance, State Taxation Administration, and General Administration of Customs jointly issued Announcement 2026 No. 20, which has introduced sweeping changes to the consumption tax on battery products.(szs.mof.gov.cn) Highlights include:
- From September 1, 2026, ordinary batteries like mercury-free primary batteries, nickel-metal hydride, lithium-ion, and all-vanadium flow batteries will be taxed at 2%. From September 1, 2027, that increases to 4%.
- Photovoltaic (solar) cells will be similarly taxed at 2% starting April 1, 2027, rising to 4% on April 1, 2028.
- Exemptions apply from September 1, 2026 through December 31, 2028 for sodium-ion batteries, solid-state batteries, fuel cells, and special solar cells like perovskite, multi-junction, and gallium arsenide types.(szs.mof.gov.cn)
Actionable Steps for Businesses
| Business Type | What You Should Do Now |
|---|---|
| Manufacturers | Evaluate current product portfolio: Are your batteries taxed under the new scheme? If so, prepare for higher rates. For those eligible for exemptions, ensure you meet national standards and retain test reports from an accredited agency (with valid CMA certification).(szs.mof.gov.cn) |
| Importers | Confirm exact product classifications: Misclassifying could lead to incorrect tax rates. Verify your customs HS codes and ensure your suppliers provide valid compliance documentation. |
| R&D or Niche Producers | If your product techniques are emerging battery types, align with regulatory bodies to define standards now. Being exempt depends upon meeting evolving national benchmarks. |
Challenges & Implications
- Supply Chain Costs: The transition from 2% to 4% for taxed battery types will increase input costs, especially for component-heavy products like EVs and energy storage systems.
- Documentation Burden: To obtain exemptions, proof of standard compliance and accredited testing is essential—companies must prepare quality control, test reports, and certifications to avoid disqualification.(szs.mof.gov.cn)
- Retrospective Risks: If products don't meet standards, you're no longer eligible—recent production may be challenged. Maintain records diligently.
Real Example
Li-B tech produces lithium-ion batteries used in electric scooters. They use batteries at scale and qualify under standard definitions. Under the new policy, starting Sept 1, 2026, their applicable batteries will attract a 2% consumption tax; by Sept 1, 2027, the rate rises to 4%. If they start producing sodium-ion batteries in late 2026 with compliant standards and valid testing, those products will be exempt through Dec 31, 2028. That creates strategic opportunity for new battery R&D to align with exempt categories.
Key Takeaways
- Classify your batteries precisely—HS codes and product types are crucial.
- Maintain testing and quality accreditation now to ensure exemption eligibility.
- Budget for rate increases—2% → 4% phase-in periods give some breathing room.
Bottom line: Battery producers and importers need to review product lines, align with standards, and build compliance systems to navigate the changing tax landscape effectively.