China’s New Consumption Tax Policy to Impact Vanadium Flow Batteries from September 2026
Date: 21 Jul 2026 |
Source: VRFB-Battery WeChat, 21 July 2026
The Chinese Ministry of Finance, together with the General Administration of Customs and the State Taxation Administration, has announced a phased adjustment to the country's consumption tax policy for selected battery technologies. The new policy, published on 16 July 2026, will take effect from 1 September 2026 and introduces a consumption tax on several battery products, including vanadium flow batteries (VFBs).
Under the revised policy:
- From 1 September 2026, vanadium flow batteries will be subject to a 2% consumption tax.
- From 1 September 2027, the tax rate will increase to 4%.
The announcement forms part of China's broader efforts to refine its consumption tax framework while supporting the development of emerging energy technologies. Alongside VFBs, conventional battery technologies such as lithium-ion, lithium primary, nickel-metal hydride, and mercury-free primary batteries will also be taxed at the same phased rates.
In contrast, the government has introduced temporary tax incentives for several next-generation battery technologies. Sodium-ion batteries, solid-state batteries, fuel cells, and selected advanced photovoltaic cell technologies—including perovskite, tandem, and gallium arsenide solar cells—will be exempt from consumption tax from 1 September 2026 through 31 December 2028, subject to compliance with applicable national product standards.
The policy also establishes compliance requirements for manufacturers seeking preferential tax treatment. Eligible battery products must meet relevant national standards, with certification provided by accredited testing institutions holding valid CMA qualifications. Additional provisions allow manufacturers to deduct previously paid consumption tax on battery materials used in the continuous production of taxable battery products, helping to reduce double taxation across the supply chain.
Industry observers note that while the new tax represents an additional cost for VFB manufacturers and developers, the technology remains an important component of China's long-duration energy storage strategy. The gradual implementation schedule provides manufacturers with a one-year transition period before the higher 4% rate comes into effect, allowing time for cost optimisation and market adjustment.
The policy will officially take effect on 1 September 2026, marking a significant change in China's taxation framework for battery technologies and reflecting the government's evolving approach to balancing fiscal policy with industrial development.