Export tax rebate policy adjustment: challenges and opportunities for the photovoltaic and battery industry

The Ministry of Finance and two other departments recently issued a document announcing the cancellation of value-added tax (VAT) export rebates for photovoltaic (PV) products, effective April 1, 2026. From April 1, 2026 to December 31, 2026, the VAT export rebate rate for battery products will be reduced from 9% to 6%; from January 1, 2027, the VAT export rebate for battery products will be cancelled. This policy adjustment will undoubtedly have a significant impact on the PV and battery industries. [Image of image 1] my country’s PV product exports account for over 60% of its production volume, with some companies relying heavily on overseas markets. The cancellation of VAT export rebates will likely lead to a rush to install PV products in overseas markets before April 1st, after which the overall export price of PV products will rise. An executive from a photovoltaic (PV) company stated that current export tax rebates are essentially subsidizing overseas users, and Chinese companies remain highly competitive even without subsidies. While there may be a short-term rush to install and price increases, in the long run, large companies and their clients have contracts with clauses regarding price increases after the cancellation of export tax rebates, so there are no issues with contract fulfillment. Regarding whether rising export prices will affect the overseas market share of PV companies, industry experts believe that Chinese PV companies are highly competitive globally, and price increases will not have a significant impact on their overseas market share. Chinese PV products are a global hard currency; even with a 20% or 30% price increase, they will still be the most cost-effective products. The China Photovoltaic Industry Association pointed out that since 2024, Chinese PV products have faced increasingly fierce competition in overseas markets, exhibiting a trend of “increased volume but decreased price.” Some companies, through low-price competition, have converted export tax rebates into negotiating power with overseas markets, effectively transforming the export tax rebate policy into a subsidy for overseas end-user markets. Appropriately reducing or eliminating export tax rebates for PV products would help promote a rational return of prices in overseas markets and curb the excessively rapid decline in export prices. However, some worry that rising export prices for photovoltaic products could force overseas customers to seek markets domestically, intensifying competition in the domestic market if they are unwilling to purchase. But company representatives believe the opposite is true; many large companies have factories overseas, and the cancellation of export tax rebates is beneficial for them. Domestic companies may face the risk of competing with overseas suppliers, potentially leading to delays in domestic deliveries. For battery manufacturers, relevant departments have communicated extensively with market players before the policy was introduced, giving them ample time to prepare. However, companies remain cautious about whether battery prices will rise. Some industry insiders say they will mainly wait and see, judging based on market expectations for new energy vehicles and policy adjustments by OEMs. Statistics show that the export price of my country’s power batteries is generally about 20% higher than the domestic price. However, in recent years, some companies have expanded production, leading to a decrease in export prices. Some companies are now selling their batteries overseas at a lower price than domestically, and the profit margins of leading battery companies have fallen below 10%. Zhou Bo, Secretary-General of the Lithium Iron Phosphate Materials Branch of the China Chemical and Physical Power Sources Industry Association, believes that under this background, reducing and eliminating export tax rebates is a good thing for the battery industry, helping to curb blind expansion of production and improve the competitiveness and profit margins of companies overseas.