China has announced a sweeping overhaul of its export tax rebate regime, marking a significant shift in fiscal and industrial policy. Under a joint notice released by the Ministry of Finance and the State Taxation Administration on 8–9 January 2026, the country will abolish or scale back value added tax (VAT) refunds for a substantial list of exported products—including solar photovoltaic (PV) components, industrial glass, and energy‑storage batteries—starting 1 April 2026. [pv-magazine.com], [China to a…ic and …]
These reforms represent one of China’s most consequential tax incentive adjustments in over a decade and reflect broader economic, trade, and industrial recalibration efforts.
Key Policy Changes
1. Abolition of VAT Refunds for 249 Exported Products (from 1 April 2026)
Beginning 1 April 2026, China will fully eliminate VAT export refunds for 249 categories of goods. These goods include:
- Solar panels and related photovoltaic products
- Monocrystalline silicon wafers
- Unassembled solar cells
- Industrial and other specialty glass products
[pv-magazine.com], [China to a…ic and …]
This measure fully withdraws a long‑standing incentive that previously granted manufacturers VAT rebates to enhance export competitiveness.
2. Phased Reduction and Abolition of Battery Product VAT Refunds (2026–2027)
China is introducing a two‑step phase‑out of VAT refunds for 22 types of battery and energy‑storage products:
- 1 April – 31 December 2026: VAT refund reduced from 9% to 6%
- From 1 January 2027: VAT refund abolished entirely
[pv-magazine.com], [China to a…ic and …]
Affected product categories include lithium‑ion batteries, battery packs, flow batteries, and upstream materials such as lithium hexafluorophosphate and cobalt‑based compounds. [pv-magazine.com]
3. Consumption Tax Policy Remains Unchanged
Despite the VAT changes, existing consumption tax exemption/refund rules for exports remain intact. Consumption tax typically applies to goods such as luxury items, petroleum products, and certain environmental categories—but these rules will not be altered by the 2026 announcement. [pv-magazine.com]
Policy Rationale
- Addressing Overcapacity and Market Distortions
China’s solar and battery sectors have expanded rapidly, resulting in:
- Significant overcapacity, especially in PV wafers and modules
- Sharp declines in global prices, leading to international trade frictions
- Heightened anti‑dumping and anti‑subsidy investigations targeting Chinese exports
[bloominglobal.com]
Ending VAT refunds serves to cool excessive export-driven growth, curb indirect subsidies benefiting foreign buyers, and encourage more sustainable, value‑added production.
- Responding to Global Trade Pressures
International markets—particularly the U.S. and EU—have increased scrutiny of Chinese exports. The policy shift helps China:
-
- Address concerns about trade imbalances
- Reduce reliance on rebates that act as implicit subsidies
- Mitigate risks of escalating trade remedies
[bloomberg.com]
- Consolidation and Industrial Upgrading
By increasing cost pressure on low-margin exporters, the policy encourages:
- Consolidation among weaker players
- Investment in higher‑end technologies
- A transition from volume-driven to innovation-driven growth
[solarvision.org]
Implications for Exporters
- Short-Term: Export Surge Expected Before April 2026
Multiple industry analysts expect a significant acceleration in exports during Q1 2026, as suppliers aim to ship goods ahead of the rebate withdrawal. [pv-magazine.com]
- Medium-Term: Increased Export Costs and Margin Compression
Removing rebates is projected to:
- Increase export prices of PV modules by 10–15%
- Reduce margins for Chinese exporters
- Pressure firms to shift production or supply chain footprints overseas
[couleenergy.com]
- Long-Term: Strategic Reshaping of Supply Chains
Manufacturers may increasingly:
- Relocate assembly operations abroad
- Shift toward high‑value integrated PV+storage solutions
- Improve tax/inventory planning to navigate transition periods
[cnabke.com]
Scope of Affected Products
The policy is accompanied by official product lists (published in Chinese) detailing customs codes for affected PV and battery items. These lists, as summarized across several public sources, include:
- PV wafers of specified diameters and thicknesses
- Various types of solar cells and modules
- Lithium‑ion batteries, battery packs, and flow batteries
- Upstream materials including lithium salts and cobalt/manganese oxides
[pv-magazine.com]
Conclusion
China’s decision to abolish VAT refunds for 249 exported products—and to phase out battery product refunds by 2027—marks a transformative moment for global solar and battery supply chains. While the move will raise near‑term export costs and reshape competitiveness, it aligns with China’s long‑term strategic objectives: rebalancing its export structure, reducing external trade tensions, and driving industry consolidation and technological advancement.
Exporters operating in or sourcing from China should closely monitor customs declaration timelines, adjust pricing models, optimize production planning, and adapt procurement strategies well ahead of the April 2026 implementation date.
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