The State Administration of Taxation ("SAT") has recently released the announcement [2018] No.27 to announce that the Protocol Amending the Agreement Between the Government of the People's Republic of China and the Government of the Kingdom of Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income Signed at Stockholm on May 16, 1986 as Amended by an Additional Protocol Signed at Stockholm on November 18, 1999 (the "Protocol") has taken effect from April 4, 2018 and shall apply to income obtained on June 1, 2016 and thereafter.
The Protocol provides that the revenue derived from a Contracting State by an enterprise of the other Contracting State from the operation of ships or aircraft in international traffic shall be exempt from any tax in the first-mentioned State. According to this provision, the China-sourced income obtained by a Swedish enterprise from the operation of ships or aircraft in international traffic will be exempt from any tax in China, and Sweden will offer the equivalent treatment to Chinese international transport enterprises.