The firm states that this is a policy issue between the two countries and is not ‘Nestle-specific’
After the Swiss government decided to suspend the most favoured nation (MFN) status granted to India, Nestle India, a fast-moving consumer goods (FMCG) major has said that this is a policy issue between the two countries and will have no impact on the company.
As per the media reports, the firm stated that the suspension of MFN status under the double taxation avoidance agreement (DTAA) is a policy issue between the two nations and is not ‘Nestle-specific’. As per the company, which owns brands such as Nescafe, Maggi and Kitkat, it was already deducting 10 per cent withholding tax on cross-country payments.
Following a ruling by the apex court in India, the Swiss government notified the suspension of the MFN status granted to India on 11 December. In a judgement last year, the Supreme Court of India stated that MFN status under the DTAA cannot be enforced unless notified under Section 90 of the Income Tax Act.
The judgement was related to a Nestle case, where the top court overturned the earlier order passed by the Delhi High Court in 2021, which had upheld the residual tax rates’ applicability after considering the MFN clause in DTAA. This led to an increase in tax liabilities for the Indian companies having their operations in Switzerland.
India is among the top ten markets for the Swiss major Nestle SA, where it is in operation for 112 years. Nestle India, which already has nine factories in the country, is working towards setting up the tenth factory in Odisha. It had a revenue of Rs 24,393.9 crore for the financial year 2023-24. The company is also looking to scale up its manufacturing capabilities among other things in the country and is investing Rs 6,000 to Rs 6,500 crore from 2020 to 2025 in the country’s market.
