China to Reintroduce Consumption Tax on Lithium-Ion Batteries; Sodium, Solid-State Exempt

China's Ministry of Finance, General Administration of Customs, and State Taxation Administration announced on July 17, 2026, the reintroduction of consumption tax on lithium-ion batteries and similar products. The policy shift, effective in phases from September 2026 and 2027, will impose a 2% and later a 4% consumption tax on specified battery types.

Effective September 2026, batteries such as lithium-ion, nickel-metal hydride, and all-vanadium flow batteries will face a 2% consumption tax, increasing to 4% in September 2027. Photovoltaic cells will follow a similar schedule, with a 2% tax starting in April 2027, rising to 4% in April 2028.

In contrast, emerging battery technologies are being incentivized. Sodium-ion batteries, solid-state batteries, and fuel cells will be fully exempt from consumption tax from September 2026 through December 2028. Similarly, specific advanced photovoltaic cells, including perovskite, tandem, and gallium arsenide types, will also be exempt during this period.

The regulations stipulate that batteries seeking tax exemptions or reduced rates must meet national standards. Manufacturers will be required to provide certificates from qualified testing institutions confirming product compliance as a prerequisite for tax filings. The intent appears to be supporting new energy storage technologies while standardizing taxation for established ones.