Nomura China New Energy: Cancellation of Export VAT Refund for Solar Battery Products
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On January 9, 2026, China's Ministry of Finance and State Taxation Administration announced significant adjustments to export value-added tax (VAT) rebate policies for the solar and battery industries. Effective April 1, 2026, export VAT rebates for solar and related products will be entirely cancelled. For batteries and related products, the export rebate rate will be reduced from 9% to 6% for the period running through December 31, 2026, before being fully eliminated starting January 1, 2027. This follows a previous reduction from 13% to 9% implemented on December 1, 2024.
Nomura notes that this policy shift is unsurprising, reflecting a broader strategic transition away from direct production subsidies. For the first eleven months of 2025, China's total exports of solar and lithium-ion battery products reached approximately $26 billion and $69 billion, respectively.
The impact will vary across regions and sectors. Solar module manufacturers possess pricing power to pass on costs in less price-sensitive markets like Europe. However, export demand in Southeast Asia may face significant margin pressure. The impact on the United States is expected to remain limited, as solar supply chains have largely localized or shifted outside of China.
Battery manufacturers should experience a more manageable transition due to the extended policy phase-in period. Industry leaders like CATL (300750 CH, Buy) can effectively pass costs downstream and leverage localized production facilities, such as their new gigafactory in Hungary, to mitigate the overall financial impact.