Bern, Switzerland: Switzerland has decided to revoke the Most Favoured Nation (MFN) status previously granted to India, a move set to take effect from January 1, 2025.

The withdrawal of this status follows the Supreme Court's ruling in the Nestle case, which did not address the issue of dual taxation in the Income Tax Act. This change will lead to higher taxes for Indian companies operating in Switzerland, as well as for Swiss firms in India.

In 1994, India and Switzerland signed a Double Taxation Avoidance Agreement (DTAA), which included the MFN status. However, after the court's decision in the Nestle case, Switzerland announced it would retract the MFN designation. As a result, Indian companies earning dividends in Switzerland will face a 10% tax, a rule that will also apply to Swiss firms.

While India has an existing Free Trade Agreement (FTA) with the European Free Trade Association (EFTA), which includes Switzerland, Iceland, Liechtenstein, and Norway, experts believe that Switzerland's latest move could influence future investments. According to reports, India is expecting an influx of investments totaling Rs 8.3 lakh crore over the next 15 years, though financial analysts suggest that these investments may now be affected by the changes in Swiss tax policy.