China is set to eliminate value-added tax (VAT) export rebates for solar and battery products in a phased rollout beginning in early 2026. According to a new directive from the Ministry of Finance and the State Taxation Administration, tax incentives for solar modules and cells will be completely removed by April 2026, while battery exports will see a gradual reduction before total elimination in 2027. This policy shift aims to curb volume-driven growth, encouraging domestic manufacturers to focus on high-value technological innovation and industrial consolidation amidst rising global trade costs.
The Chinese government has announced a significant policy change that will phase out tax incentives for the country’s dominant renewable energy sectors. Under a joint notice released by the Ministry of Finance and the State Taxation Administration, the existing value-added tax (VAT) export rebates for photovoltaic products will be entirely abolished starting April 1, 2026. The battery sector faces a similar trajectory; rebate rates will drop from 9% to 6% on April 1, 2026, before being fully discontinued on January 1, 2027.
The scope of the new regulations is extensive, covering a wide range of solar components. This includes monocrystalline silicon wafers with diameters exceeding 15.24 centimeters, regardless of whether their thickness is above or below 220 micrometers. The list also encompasses unassembled solar cells and finished solar modules, capturing the majority of mainstream products currently manufactured for the global market.
Beyond solar technology, the policy impacts a broad spectrum of energy storage solutions. Affected products include lithium-ion batteries, battery packs, and newer technologies such as all-vanadium redox flow batteries. Crucially, the mandate also targets essential upstream materials used in lithium-based production, such as lithium hexafluorophosphate, lithium manganate, lithium cobalt oxide, and various lithium nickel cobalt manganese oxides.
This move represents the second major reduction in export incentives within a short period. In late 2024, Chinese authorities reduced rebate rates from 13% to 9% for solar equipment and batteries. Industry analysts suggest that while the immediate effect will be a notable increase in export costs for manufacturers, the three-month transition period leading up to April 2026 may trigger a temporary surge in shipments as companies rush to fulfill orders under the current tax regime.
In the long term, the removal of these subsidies is expected to reshape the competitive landscape of China’s green energy industry. By increasing the financial burden on low-margin exporters, the government seeks to drive the industry toward higher-value manufacturing and technological advancement. This strategic pivot is intended to favor established players capable of sustaining growth through innovation rather than relying on state-supported price advantages.