TAX Update – New Protocol to Sino-Swedish Tax Treaty

A new protocol to the 1986 Double Tax Treaty (DTT) between China and Sweden has been signed on June 5th, 2017, in Stockholm, Sweden. The protocol between the two countries includes exemption of Value Added Tax (VAT) for international transportation services.


The senior officer, Mr. Wang Jun from State Administration of Taxation of the People’s Republic of China, and senior officers from the Ministry of Finance and Tax Office of Sweden have attended the signing ceremony.

What does the old treaty say about international transportation?


According to the initial treaty, international transportation or traffic includes “any transport by a ship or aircraft operated by an enterprise which has its head office in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State” (Art.1 [i])


Article 8 and Article 13 stipulate that profits from international transport services as well as gains from the alienation of transport material are taxable in the state where the head office is located.

What might change?


The text of the new tax treaty has not been released yet. But China’s VAT reform has added further tax compliance rules for international businesses, including logistics and transportation firms. We, therefore, assume that the aim of the new treaty is to give more relief on the tax burden of enterprises doing cross-border businesses and to clarify the VAT tax obligations. We will keep you updated on the detailed changes once the protocol is released to the public.

ECOVIS Beijing is a consultancy focusing on accounting, audit, legal and tax advisory for foreign SMEs and startups in China. If you have any further questions on VAT and tax incentives in China, please contact

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Elizabeth Shi

Elizabeth Shi is a Senior Tax Manager at Ecovis Beijing. She has over 10 years of working experience in China´s legal, tax and business field. Prior to joining Ecovis, Elizabeth has worked in the Big Four accounting firms’ tax and business advisory departments. She has advised companies on various China tax and legal related matters, including dealing with tax and other government authorities. Her expertise covers tax compliance, restructuring, M&A, tax due diligence, liquidation and deregistration related tax matters as well as tax planning for companies and individual expatriates. Elizabeth started her professional career as a legal consultant in a prestigious IP firm, working on foreign direct investment (FDI) and intellectual property (IP) projects. With her legal background both in academics and in practice, she has a profound understanding of China’s tax system and its operation. For further information please


Ecovis Beijing is the trusted tax and legal advisor to several embassies and official institutions in China. It specializes in mid-sized international companies and is focused on tax & legal advisory, accounting and auditing. If you’re interested in finding out more about tax and legal, don’t hesitate to sign up to our Newsletter, give us a call +86 (10) 6561 6609 or contact us directly via