China is introducing a temporary exemption from consumption tax for selected new-technology batteries for the next two years in a phased move to promote development of the sector.

Sodium ion and solid state are among a range of technologies that will be free from consumption tax from September this year to December 2028, under new rules issued by customs and tax authorities and the finance ministry.

The ruling, confirmed by state news agency Xinhua on July 17, takes effect on September 1 and is designed to promote sustainability and stimulate technological advancement.

Lithium ion, nickel-metal hydride and all vanadium redox flow batteries will be taxed at 2% from September and at 4% from September 2027. Photovoltaic cells will face a 2% tax from April 2027, rising to 4% from April 2028.

China currently levies a 4% consumption tax on batteries, a policy in place since February 2015, with seven categories including lithium ion and solar cells exempted, Xinhua said.

Consumption tax targets selected products deemed as luxury items or those with potential social or environmental impacts — unlike VAT, which is levied broadly on goods and services at various stages of the supply chain.

Batteries International reported earlier this year that China was about to adjust or abolish export tax rebates for battery and photovoltaic products in response to volatility in international trade markets.

That came after China slapped a raft of export restrictions on technologies critical for manufacturing EV batteries in October 2025, in a move seen as a fresh bid to remind international markets that China had no intention of relinquishing dominance in the global batteries market for EVs and energy storage systems.