Switzerland has revoked the special preferential treatment granted to India, the ‘Most Favoured Nation’ (MFN) status. The move could pose new challenges to the trade and economic relations between the two countries. According to World Trade Organization rules, a country that has been granted MFN status has to provide special benefits in terms of customs and trade policies. However, a Supreme Court of India verdict in September 2023 stood in the way.
.PNG)
The Supreme Court verdict said that ‘double taxation avoidance agreements’ will not be effective without notification under Section 90(1) of the Indian Income Tax Act. As a result, the Swiss Finance Department said on Wednesday that the MFN facility granted to India is being suspended from January 1 next year.
As a result of this decision, the withholding tax rate for Indian companies in Switzerland will return to 10 percent, which was reduced to 5 percent in 2021.
Analysts say that the move could have a negative impact on India’s exports and investments. However, Indian Foreign Ministry spokesperson Randhir Jaiswal said that the matter could be discussed with EFTA (European Free Trade Association) in the future.
Experts believe that this move by Switzerland could open up new directions in India-Swiss economic relations.
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