Source: DH
Context: Switzerland has recently revoked India’s Most Favoured Nation (MFN) clause in Double taxation avoidance agreement status following a Supreme Court ruling in an adverse tax case involving Nestle.
About Most Favoured Nation (MFN):
- What It Is:
- MFN is a principle under the World Trade Organization (WTO) that mandates non-discrimination among member countries in trade policies.
- Members are treated equally in terms of tariffs, quotas, and trade barriers.
- Designation Given By:
- WTO grants the MFN designation automatically to its 164 members.
- Features of MFN:
- Ensures lowest tariffs, highest import quotas, and minimal trade barriers among member countries.
- Aims to promote fair trade and equitable market access.
- Origin:
- Established post-World War II as a cornerstone of the multilateral trading system under the WTO framework.
- Exceptions:
- Bilateral or regional trade agreements.
- Special access for developing nations.
- Non-WTO countries like Iran or North Korea are not bound by these rules.
- Removal of MFN:
- No formal WTO procedure for suspending MFN status exists.
- Members are not obligated to notify the WTO when removing MFN treatment.
- Recent Development:
- Effective January 1, 2025, Indian companies face a 10% withholding tax on income in Switzerland.
Insta Links:
Meta Description:
Learn about the Most Favoured Nation (MFN) principle under WTO, its criteria, exceptions, and recent developments like Switzerland revoking India’s MFN status impacting trade and taxes.
