China Will Cancel The Value-Added Tax Export Rebate For Vape

On January 8th, the Chinese Ministry of Finance and the State Administration of Taxation issued Announcement No. 2 of 2026, announcing the adjustment of the value-added tax export rebate policy for some products.

According to the announcement, starting from April 1, 2026, the value-added tax export rebate for photovoltaic and other products will be cancelled. In the attached “List of Photovoltaic and Other Products” in the announcement, product code 2404120000- “Non combustible products without tobacco or reconstituted tobacco, containing nicotine” is included in the list. Based on this, it can be inferred that the value-added tax export rebate for vapes will be cancelled.

For China vape companies that have long relied on export tax rebates to fill profit gaps and support their operations, this is not a simple policy adjustment, but a life and death “weaning order”. With less than 90 days left until the policy officially takes effect, this sudden industry test is accelerating the elimination of non compliant and low profit enterprises, and opening up a new development track for brands that truly possess core competitiveness.

1. Disassembly of core policy provisions (accurately match and avoid pitfalls)

According to the Ministry of Finance’s Document No. 2 of 2026 and its attached list, the impact of this adjustment on the vape industry can be summarized as “two types of products, two treatments, and two time nodes”: vape device (HS code 2404120000): without any transition period, from April 1, 2026, the export tax rebate rate will be directly reduced from the current standard to 0, which means that export enterprises will not be able to enjoy any value-added tax rebate benefits, and the export cost will directly increase. Vape batteries (included in Annex 2 Battery Product List): Set a short-term transition period, from April 1 to December 31, 2026, and reduce the tax rebate rate from 9% to 6%; Starting from January 1, 2027, the tax refund rate will officially return to zero, completely canceling tax refunds. Judgment criteria: The “export date” indicated on the export goods declaration form shall prevail, rather than the contract signing date or shipment date. This means that enterprises cannot avoid policy impacts through “hoarding customs declaration”. Important supplement: The export consumption tax refund (exemption) policy remains unchanged, and enterprises need to focus on distinguishing the differences between value-added tax and consumption tax refunds to avoid compliance risks caused by policy misunderstandings.

2. Portraits of the three type most severely impacted companies

Not all vape companies will face the same level of impact, and the following three types of companies will become the “hardest hit areas” of policy adjustments: small and medium-sized export enterprises that rely on tax refunds to “extend their lives”: these enterprises generally lack core technology, have low product added value, and their profits mainly come from export tax refunds of around 13%. After the cancellation of tax refunds, they will directly face losses; Contract manufacturing enterprises with the core strategy of “low price volume”: relying on low prices to seize overseas markets for a long time, the profit margin has been maintained at a low level of 5% -8%, and the cost advantage has been completely eliminated after the cancellation of tax refunds; Enterprises with chaotic supply chain management: unable to clearly distinguish the product classification between complete machines and batteries, or facing compliance risks such as false declarations and inconsistent documents, may face a dual blow of “tax refund cancellation+administrative penalties”. The previous case of vape export violations investigated by a certain customs has sounded the alarm: a certain enterprise declared the export of a batch of disposable vapes through general trade, with a declared value of more than 500000 yuan, attempting to defraud 13% of the export tax rebate. In the end, it was fined more than 70000 yuan for the goods not actually leaving the country, and the refunded tax was fully recovered. In the current context of stricter regulation, any attempt to evade tax refund adjustments through illegal operations will face severe legal sanctions.

Reference: State Administration of Taxation Policy and Regulation Database