MFN Clause

From January 1, 2025, Switzerland has suspended the Most-Favoured-Nation (MFN) clause in the Double Taxation Avoidance Agreement (DTAA) with India.

Understanding DTAAs

  • DTAAs prevent double taxation by allocating taxing rights between the residence and source countries.
  • India has DTAAs with 90+ countries, including the USA, UK, UAE, and Mauritius.
  • The MFN clause ensures a country receives equal or better tax benefits than any other treaty partner.

Key Issues

  • Treaty Shopping: Abuse of India-Mauritius DTAA to evade taxes.
  • Interpretation Disputes: Nestle SA case (2023) ruled MFN benefits require explicit notification under Section 90 of the Income Tax Act.
  • Conflict with Domestic Tax Laws: Differences between ....
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