India News
Switzerland has suspended the "Most Favoured Nation" (MFN) status for India, which was part of a 1994 agreement to avoid double taxation. This decision, effective from January 2025, will increase taxes for Indian entities operating in Switzerland.
The move follows a 2023 Supreme Court ruling related to Nestlé, which clarified that India is not obligated to lower tax rates for Swiss entities without a specific notification. As a result, dividends from Swiss sources to Indian residents, and vice versa, will be taxed at 10%, the original rate, instead of the reduced rate of 5%.
The MFN clause, introduced in 2010, required Switzerland to benefit from any tax reductions India made with OECD countries. However, after Switzerland lowered the tax rate for Indian entities, India did not reciprocate. The suspension could affect future investments in India, but the tax provision may be restored if India issues the necessary notification.'
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