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OUT-LAW NEWS 2 min. read
Many solar panels installed in South Africa are manufactured in China. Photo: iStock/Katja Forster
27 Mar 2026, 11:23 am
Upcoming changes to China’s export tax rebate system will materially affect global supply chains, including South Africa’s solar panel market, an expert has said.
The recent decision by the Chinese Ministry of Finance and the State Taxation Administration to change export tax rebates for photovoltaic (PV) and battery products is expected to alter significantly the playing field for foreign companies sourcing renewable energy components and industrial materials from Asia.
Effective from 1 April, the Chinese export tax rebates for the value added tax (VAT) of PV products will be revoked. Export tax rebates for the VAT of battery products will also be reduced from 9% to 6% before being revoked entirely from 1 January 2027.
China sits firmly at the centre of the global solar manufacturing industry and accounts for the vast majority of the world’s production capacity. This concentration of production capacity means that most solar panels installed worldwide originate from Chinese factories, giving the country a large level of influence over the international solar supply chain.
This also means that most international buyers – South Africa included – remain deeply reliant on Chinese manufacturers, as well as their pricing and supply dynamics.
With the elimination of these rebates, Chinese manufacturers, who originally received 13% VAT rebates for these product exports and currently receive a 9% VAT rebate on these product exports, will no longer be able to reclaim any portion of the VAT on these products going forward.
This will inevitably result in a direct increase in the prices of exporting products across several key sectors such as chemicals, ceramics, solar PV, batteries, plastics, silicon wafers and certain other industrial materials.
The removal of the rebate also eliminates a significant liquidity support mechanism that previously allowed Chinese manufacturers to recover VAT quickly, reinvest in their operations and provide competitive international pricing.
There are concerns among industry commentators that these changes will increase costs for countries that typically buy solar and battery products from China. South Africa, like other African nations, already pays significantly more than other countries for such products on account of higher transport costs, smaller import volumes and tariffs.
It is also unclear how this will affect the rollout of the South African government’s ambitious Integrated Resource Plan, which includes targeting the procurement of 25 GW solar PV and 8.5 GW battery storage by 2039.
Many foreign manufacturers and buyers of these Chinese products are likely to attempt to expedite shipments ahead of the regulatory cut-off dates, if they have not done so already. This is already creating short-term pressure on supply chain and logistics networks, resulting in a temporary surge in exports that will likely be followed by a post-deadline slowdown.
In South Africa, John van Zuylen, CEO of the Africa Solar Industry Association, told Business Insider Africa that the changes would not be as “catastrophic” as some might fear, and that they would usher in a new stage of consolidation for the solar PV market.
Commenting on the upcoming changes, energy law expert Jurg van Dyk of Pinsent Masons said close collaboration between manufacturers and purchasers would be “essential” to help mitigate risks related to supply bottlenecks, transportation delays, and other disruptions that may arise from the potentially accelerated ordering cycle.
He added: “Project owners, employers and contractors will also need to carefully assess how the reductions to export tax rebates may affect their existing contractual arrangements.”
Van Dyk warned these changes – depending on the scale of the project and the precise wording of the relevant clauses – could also trigger a claim under the contract’s change-in-law provisions.
However, because standard market practice in South Africa is to limit contracts to the laws of the Republic of South Africa, he said such limitations may prevent contractors from relying on a change in law mechanism for relief. “Ultimately, the impact will depend on the specific terms and wording agreed to in each contract,” he said.
Contact an adviser
Jurg van Dyk
Partner
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