Revenues of Swiss shipping companies derived from activities in China are subject to Chinese Business Tax/VAT. Neither the current double tax treaty nor the new free trade agreement between Switzerland and China provide for an exemption from VAT. Switzerland intends to eliminate this disadvantage compared to other countries.
Swiss shipping companies have approached the Swiss Finance Department due to the negative aspect that they suffer Chinese Business Tax/VAT on their revenues from shipping activities in China although according to the double tax treaty between China and Switzerland profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State (shipping article).
Contrary to Switzerland, other states, e.g. Singapore, have an agreement with China which excludes revenues realized from shipping activities in China from Business Tax/VAT.
Switzerland does not have this kind of agreement with China so far. Also the newly negotiated free trade agreement between Switzerland and China does not provide for such Business Tax/VAT exemption as this agreement does only cover duties to get a preferential treatment but there is no provision for taxes (such as VAT). However, Switzerland started the process in order to get also a similar agreement like Singapore. Currently, there is no information by when such solution may be agreed and enter into force.
Further information on the issue: Global China Practice