The MFN provision is a fundamental non-discrimination standard in international economic relations.
Consider a scenario where State A signs a bilateral treaty with State B that includes an MFN provision. If State A later grants benefits to a third country, State C, those benefits should also be extended to State B due to the MFN clause. Switzerland's recent decision is not retaliatory but rather a reciprocal action stemming from a ruling issued by the Supreme Court of India in October 2023 in the case of Assessing Officer v. Nestlé. In this case, Nestlé sought a preferential dividend tax rate of 5%, instead of the standard 10%, by referencing the MFN provision in the India-Switzerland DTAA. Nestlé argued that India offered a lower dividend tax rate to companies from OECD member countries such as Colombia and Lithuania. The MFN provision in the India-Switzerland DTAA provides that the benefits given to a country "which is a member of the OECD" should be extended to the signatory state.
This story is from the December 27, 2024 edition of Hindustan Times Pune.
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This story is from the December 27, 2024 edition of Hindustan Times Pune.
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