On November 15, China's Ministry of Finance and the State Administration of Taxation announced a reduction in the export tax rebate rate for certain products, including refined oil, photovoltaic (PV) products, batteries, and some non-metallic mineral products, from 13% to 9%. This represents a 4% decrease in the rebate rate for photovoltaic exports, significantly impacting China's PV market, which heavily relies on exports.
Export tax rebates refer to the refund of domestic taxes (such as product tax, value-added tax, business tax, and special consumption tax) paid during the production and circulation of exported goods. As an essential component of a country's tax system, export tax rebate mechanisms aim to balance domestic product tax burdens and allow domestic products to enter international markets at tax-free costs, thereby enhancing competitiveness and increasing exports.
Key points regarding this change are summarized below:
- Impact on Profit Margins of Export-Dependent Companies
The reduction in the export tax rebate rate will primarily affect companies that rely on tax rebates to boost profitability. With the lowered rebate rate, the cost structures for purchasing and selling PV export goods will shift. Small and medium-sized enterprises (SMEs) with limited revenues, which previously benefited from the 13% rebate to improve cash flow and efficiency, will see their operational quality decline. Additionally, as the prices of PV modules have dropped in the first three quarters of this year, the total export value of PV modules has shrunk by 30%. Now, with higher export costs, SMEs—especially those less dependent on rebates—will face intensified challenges.
- Limited Impact on Major Exporters
For large-scale PV exporters, the rebate reduction will affect cash flow, but the overall impact will be less significant than for SMEs. Although the export rebate amounts for large companies might reach billions of RMB, the share of rebate income in their total operations remains relatively low.
- Influence on Overseas Competitiveness and Industry Dynamics
The rebate reduction will push enterprises to rethink their strategies for industrial restructuring and enhancing product technology. With rising costs, shrinking profit margins, and ongoing domestic PV supply chain expansion, less efficient, low-tech, and poorly cost-controlled exporters will face elimination, intensifying industry competition.
Companies with superior technological capabilities, economies of scale, and strong cost controls are expected to emerge as leaders, accelerating industry consolidation.
PV enterprises will increasingly focus on technological innovation and product upgrades, investing more in R&D to improve conversion efficiency and expand applications. For example, they may develop higher-efficiency PV cells, adopt advanced manufacturing processes, or cater to niche markets such as mobile PV products, driving overall industry progress.
- Export Performance Is Not Solely Dependent on Rebate Rates
A higher export tax rebate rate does not necessarily guarantee better export performance for PV enterprises. Export volumes and values depend on the demand in target markets, aligned with economic cycles, as well as factors like marketing coverage and integrated supply chains. Consequently, lowering the rebate rate may not directly lead to a decline or stagnation in PV exports.
- Accelerating Overseas Expansion and Market Diversification
The rebate reduction will prompt companies to explore more avenues for maintaining exports, including:
Building Overseas Factories: Enterprises may expedite establishing production facilities abroad to reduce dependence on domestic export channels.
Developing New Markets: The shift may lead companies to pivot from traditional low-cost markets to new regions, seeking to expand their sales footprint.
Conclusion
The adjustment in export tax rebate rates will likely have a more significant impact on small and medium-sized PV enterprises. It may encourage major firms to adjust their export portfolios, prioritize clearing overseas inventory, and focus on exporting high-value, high-tech products. This could lead to greater market share and further eliminate excess capacity. While the change may cause short-term fluctuations in PV stock prices, it is expected to promote healthy industry development and enhance international competitiveness in the medium to long term through technological innovation and market diversification.
Source：https://mp.weixin.qq.com/s/t53U7SMu7EYB5m9Cjsn_ig
