Switzerland Revokes India's MFN Status Amid Nestle Tax Dispute

Switzerland has revoked India's Most Favoured Nation status post an Indian court's ruling against Nestle, impacting Indian business operations there. From January 2025, Indian firms in Switzerland will face higher withholding taxes on income. This decision aligns with a recent Indian Supreme Court case involving Nestle.

In a significant economic development, Switzerland has announced the withdrawal of the Most Favoured Nation (MFN) status it had granted to India. This follows a legal ruling by the Indian Supreme Court against Switzerland-based multinational Nestle, triggering adverse tax implications for Indian businesses.

Effective January 1, 2025, Indian companies operating in Switzerland will be subjected to a heightened withholding tax rate on income generated within the European nation. The new rule will impose a 10 percent tax on dividends earned by Indian entities.

Switzerland's Federal Department of Finance released a statement specifying the suspension of the MFN clause in the bilateral tax agreement with India, following the court ruling. This decision marks a pivotal move in Swiss-Indian economic relations.

(With inputs from agencies.)