Chinese solar manufacturers will receive a 50% tax rebate, the Ministry of Finance has confirmed.
Companies will be able to immediately claim back half of the value-added taxes they pay.
Value added tax of 17% is charged on gross sales for companies and individuals in China selling goods or services.
The ministry said the policy would be implemented from 1 October 2013 till 31 December 2015.
The move, which the government claims will encourage the take-up of renewable energy, will also ease the burden on the country’s solar manufacturers.
A number of Chinese manufacturers are currently struggling as the shakeout continues.
LDK Solar, which has debts of US$2.75 billion, was recently only able to repay 10% of a US$23.8 million bond.
A recent Deutsche bank research note expects global and domestic Chinese demand to grow with the latter exceeding expectations.