Export VAT Rebate Axed on April 1—Self-Help Strategies to Recover Funds
- ExpertinChina
- 2 hours ago
- 3 min read
On January 8, 2026, Beijing time 15:00, the Ministry of Finance & STA released the Adjustment of Export VAT Rebates for Photovoltaic and Other Products. Effective 00:00 on April 1, 2026—China will cancel or slash export VAT rebates for a carefully chosen shopping list of products. Photovoltaic panels, lithium-ion batteries, ceramic tiles, phospho-chemicals and e-cigarettes are first in line. The headline is simple: the world’s largest goods exporter is no longer willing to subsidise every container that leaves its shores. The sub-text is more important: Beijing is rewiring the incentive structure that has powered “Made in China” for two decades.
What exactly changes on April 1?
Photovoltaics: the 13 % rebate drops to zero on April 1,2026.
Lithium-ion batteries: 9 % to 6 % through December 31, 2026, then to zero on January 1, 2027.
Ceramic tiles, phospho-chemicals and e-cigarettes: straight to zero on April 1, 2026.
The wording is “export tax exemption and rebate cancellation,” which means exporters must now treat foreign sales as domestic ones, paying 13 % VAT before customs clearance unless they can pass the cost along. On a 50 MW solar-module shipment worth USD 12 million, that locks up USD 1.56 million of working capital—enough to wipe out the 2–3 % net margin most tier-2 panel makers live on.
Experts in China treats 1 April 2026 as the deadline to flip from “state allowance” to “self-generated tax savings”: the rebate is history, but every compliance-approved switch that funnels money back onto your books is still up for grabs.
Three Fast Ways to Reclaim the Lost Rebate
Bonded-Zone Routing
Instead of shipping straight from your existing plant, move the final “touch-point” into one of China’s customs-supervised bonded zones (FTZ, export-processing zone or comprehensive bonded area). Inside the fence, domestic sourcing is treated as “offshore” procurement:
No 13 % VAT is levied on incoming silicon, cobalt salt, aluminium frames or consumables.
You only pay VAT on the value you add inside the zone, typically 3-4 % of FOB price.
Customs releases the goods within 24 hours because the electronic ledger is pre-approved.
Cash-flow math: on a USD 10 million battery shipment you free up roughly USD 900 k that would otherwise sit in the tax office for 60-90 days—enough to fund the next raw-material buy or a down-payment on new equipment.
R&D Super-Deduction
Beijing kept the 75 % R&D extra-deduction alive precisely to cushion exporters hit by the rebate cut. We screen every step of your production flow and re-classify technical tweaks—wafer texturing, laser dicing, cell sorting, tab-bar welding, electrolyte dosing—as qualifying R&D activities. The result:
Every dollar you spend on those steps is grossed up by 175 % before being offset against corporate income tax.
A USD 1 million annual “process optimisation” budget becomes a USD 1.75 million deduction, worth USD 437 k in cash at the 25 % CIT rate.
Approval is obtained on a self-assessment plus subsequent audit basis; we prepare the technical report, cost breakdown and maintain the contemporaneous documentation so the claim is bullet-proof if SAT comes knocking three years later.
Local Cash-Back
City governments—not the central treasury—keep 25 % of VAT collections and are free to return up to half of that share to firms they want inside their GDP fence. We maintain a live matrix of several economic zones in Shanghai, Hefei, Jiangxi, etc. that currently refund 30-50 % of the local VAT slice for qualified enterprises. You need:
Your company's industry meets the requirements of the economic zone.
Move your company to the economic zone or register a new company in the zone (can be 100 % foreign-owned).
Commit to a minimum revenue throughput. The threshold varies with the areas.
Every dollar saved is equity value created. Book a consulting with expert in China today and let our expert to design a tailor-made tax plan for you before the 1 April 2026 deadline.
Comments