China has ended more than a decade of tax-free treatment for lithium batteries. A new policy jointly announced by the Ministry of Finance, the General Administration of Customs and the State Taxation Administration took effect in September, imposing a 2% consumption tax on lithium primary batteries and lithium-ion accumulators.
The move marks the close of a preferential regime in place since February 2015, when seven categories of batteries — including lithium cells — were exempted from consumption tax. Officials say the lithium-battery industry has now entered a mature, market-driven phase, and a timely resumption of the tax helps improve the green-tax adjustment system, broaden a stable revenue base, and push the sector from scale expansion toward high-quality development.
Crucially, the policy pairs the levy with targeted relief for frontier technologies. From September 1, 2026 through December 31, 2028, sodium-ion batteries, all-solid-state batteries, fuel cells, and next-generation photovoltaic cells (perovskite, tandem and gallium-arsenide) are exempt from the consumption tax — a deliberate incentive to accelerate R&D and industrialization of next-generation energy storage.
The tax will rise in steps: from September 1, 2027, the rate on lithium primary and lithium-ion batteries climbs to 4%. Analysts say the graduated schedule and long transition window let power-battery makers absorb the modest cost change smoothly, while a higher entry and production-cost threshold nudges firms toward high-end, high-value-added products.
Industry observers note that the levy on lithium batteries, combined with the staged exemption for emerging chemistries, forms a complementary policy mix that encourages multi-track battery breakthroughs — directly supporting the newly issued 15th Five-Year Plan for intelligent, connected new-energy vehicles, which for the first time writes capacity early-warning and regulation into the industry blueprint.
