China to levy consumption tax on lithium-ion batteries and solar cells

China will impose a consumption tax on some previously tax-exempted battery products, including lithium-ion batteries and photovoltaic cells, a finance ministry statement said on Friday.

• China will levy a 2% consumption tax on battery products including lithium primary batteries and lithium-ion batteries from September 1, the statement said. The rate will rise to 4% on September 1, 2027.

• A 2% consumption tax will be imposed on solar cells starting April 1, 2027. The rate will rise to 4% after a year.

• Consumption tax will be exempted for products including sodium-ion batteries, solid-state batteries, fuel cells and certain advanced types of solar cells from September 1, 2026 to the end of 2028.

• China currently imposes a 4% consumption tax on battery products, but lithium-ion batteries, solar cells, fuel cells and lithium primary batteries are exempted, according to regulations released in 2015.

• Lithium-ion batteries are rechargeable batteries used in a wide range of products, from electric vehicles to smartphones and laptops.

• Chinese policymakers have been trying to rein in industrial overcapacity across sectors including photovoltaics and EV batteries amid weak domestic demand.

• The policy move will help to upgrade industry and protect the environment, state-run news agency Xinhua said, citing industry insiders.

Reuters

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