China has eliminated the VAT rebate for exporters of solar photovoltaic (PV) products. It had stood at 9%, covering most of the 13% VAT rate.
The change took effect on 1 April, following a finance ministry announcement in January.
At the same time, the export rebate for battery products has dropped from 9% to 6%. On 1 January 2027, battery rebates will go altogether.
China has had VAT export rebates on a wide range of industrial goods since 1985. Until late 2024, solar products were treated like other manufactured exports: rebates matched the domestic VAT rate, effectively removing the tax burden on exported goods. Then the finance ministry cut rebate rates for solar panels, batteries and certain non-metallic mineral products from 13% to 9%, while the domestic VAT rate stayed at 13%.
Before 2023, Chinese solar and battery makers fuelled rapid overseas expansion through aggressive pricing. According to Yicai, smaller PV firms routinely operated on gross margins (that is, profit after production costs) of just 3% to 5%, relying on rebates to give them headroom to undercut competitors abroad.
With those rebates now gone, prices are going up across the board. The country’s biggest solar manufacturers have already moved to raise them. Yet demand for Chinese panels remains strong, fuelled in part by fears over oil supply disruptions through the Strait of Hormuz.
A representative from JinkoSolar told 21st Century Business Herald that the outlook could be favourable: “Based on what we saw during the Russia-Ukraine conflict, this is generally positive for the solar industry.”
In a recent BBC interview, Octopus Energy CEO Greg Jackson said the company had seen a 50% jump in solar panel sales since the US-Israel conflict with Iran drove up oil and gas prices. Some of Octopus Energy’s panels are supplied by Chinese manufacturer JA Solar.
Read Dialogue Earth’s previous analysis on how China came to lead solar and battery manufacturing.