Mint Quick Edit: Contain the damage from the Swiss roll-back of a tax benefit
Subscribe to enjoy similar stories. The investment relationship between India and Switzerland has taken a blow, with the latter having withdrawn the most favoured nation (MFN) status it granted India as part of a double taxation avoidance agreement.
The reason, it said, is the effect of a 2023 ruling by India’s Supreme Court on a case involving Nestle that the pact’s MFN clause doesn’t automatically kick in under certain conditions. Switzerland, having found its interpretation at odds with the Indian judiciary’s on the matter of how cross-border dividends are taxed, said a lack of reciprocity in offering a tax benefit as a result of that ruling had made it deny India MFN status.
What the Swiss now claim will be a level taxation field is likely to impose an added tax burden on Indian businesses operating in Switzerland. Indian businesses that have overseas units in this European financial centre have reason to be disappointed.
It also reduces the incentive for businesses in both countries to invest in each other. Worse could follow if other countries also review their arrangements to see if bilateral circumstances have changed.
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