Policy update will increase export costs for silicone supply chains
The Ministry of Finance of the People’s Republic of China and the State Taxation Administration have jointly issued the Announcement on Adjusting Export Tax Rebate Policies for Photovoltaic and Related Products. According to the announcement, export VAT rebates for photovoltaic products and selected chemical materials will be cancelled starting April 1, 2026.
The official product list includes HS Code 39100000 – Polysiloxanes in Primary Forms, meaning that exports of basic silicone polymers will no longer be eligible for the 13% VAT export rebate currently applied. This change is expected to increase export costs for silicone manufacturers and traders, placing additional pressure on pricing and margin structures across the global supply chain.
Policy Scope: Polysiloxanes Included in Rebate Cancellation List
HS Code 39100000 covers polysiloxanes in primary forms, which are core raw materials used in:
- Silicone elastomers and rubbers
- Silicone fluids and oils
- Sealants and adhesives
- Coatings and release agents
- Photovoltaic encapsulation materials
- Electronic and automotive silicone components
With the rebate removed, exporters will effectively absorb the full VAT cost, which may translate into higher FOB prices or reduced profitability, depending on contract structure and negotiation terms.
In light of recent developments, Silfluo advises clients to anticipate an immediate increase in the export cost base. This impact will be particularly pronounced in standard-grade polysiloxanes, a sector characterized by high price sensitivity and limited product differentiation.
While this policy affects a portion of Silfluo’s standard supply chain, we remain committed to the development of high-value, advanced solutions. Notably, these advanced products are excluded from the new policy restrictions, as they are distinct from polysiloxanes in primary forms.
About This Policy Update
This analysis is based on the official announcement jointly issued by China’s Ministry of Finance and State Taxation Administration regarding export VAT rebate adjustments for photovoltaic and related products. The policy will take effect on April 1, 2026, and applies to all listed HS codes, including 39100000.