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A bad news has come for India from Switzerland. Switzerland has announced the withdrawal of India’s Most Favored Nation (MFN) status. This is going to have a huge impact on India. This order of Switzerland will come into effect from January 1, 2025. So let us know what is MFN? Due to this, the prices of many things in India can increase rapidly. Tell us how?
What is most favored nation?
Most Favored Nation is a mutual agreement between two countries. According to the World Trade Organization (WTO), there will be no discrimination in trade between the two countries under MFN. Double Taxation Agreement (DTA) was signed between India and Switzerland. Under which companies of both the countries have got tax exemption. Due to this, Indian companies were earning huge profits in Switzerland and Swiss companies in India.
What will be the impact on India?
Now Switzerland has announced the cancellation of MFN. Due to which Indian companies have to pay heavy taxes in Switzerland. This will also affect the goods coming from Switzerland. For example, Nestle is a Swiss company whose products like Maggi, Munch and KitKat chocolates, dairy products, coffee are widely used in India. But these things may become expensive from January 1.
How much tax will Indian companies have to pay?
After this order of Switzerland, Indian companies have suffered a big blow. The new rules for Indian companies in Switzerland will come into effect from January 1, 2025. Under this, Indian companies will have to pay 10 percent of the profits made in Switzerland as tax to the Swiss government.
Why did Switzerland take this step?
Let us tell you that Switzerland has taken this decision after the decision of the Supreme Court in India. The Supreme Court, while giving its verdict against Nestle Company, talked about increasing the tax. The Supreme Court said that unless DTA is notified under the Income Tax Act, all Swiss companies, including Nestle, will have to pay double tax. After this order of the Supreme Court, the Swiss government also announced the cancellation of MFN.