Current Context : Switzerland suspended the Most Favoured Nation (MFN) clause in its tax agreement with India.
- This follows a 2023 Supreme Court ruling on Nestlé, which clarified MFN clause applicability
Background of Tax Agreement:
- Established in 1994and updated in 2000 and 2010 to reflect changing economic conditions.
- Aimed at promoting smoother financial relations between India and Switzerland
About Most Favoured Nation
- Most Favoured Nation (MFN)status is a trade and economic principle in which a country grants another country the best trade terms it offers to any other nation. This can include benefits such as lower tariffs, trade privileges, or access to specific markets.
- Purpose : MFN ensures equal treatment for all countries, meaning if a nation offers a benefit to one country, it must extend the same benefits to other nations with MFN status.