Sat Dec 14 09:09:30 UTC 2024: ## Switzerland Suspends India’s Most-Favoured-Nation Status
**New Delhi/Geneva:** Switzerland has suspended India’s Most-Favoured-Nation (MFN) status, effective January 1, 2025. This decision follows a Supreme Court ruling that invalidated a provision in the India-Switzerland Double Taxation Avoidance Agreement (DTAA) unless it’s notified under the Income Tax Act.
The ruling impacts Swiss companies like Nestlé, who will now face higher dividend taxes. Indian companies will also see reduced tax benefits on income earned in Switzerland. The move raises concerns about potential impacts on Swiss investments in India.
The MFN status, a cornerstone of the World Trade Organization (WTO) agreement, guarantees non-discriminatory trade treatment. While the WTO aims for equal treatment among member nations, Switzerland’s action cites the Supreme Court decision which overturned a Delhi High Court ruling that had upheld the DTAA’s MFN compliance. The Swiss government claims this necessitates the suspension of the MFN status to avoid double taxation discrepancies. The situation differs from typical WTO Article 21B scenarios involving security disputes, indicating a unique legal challenge concerning tax agreements.
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