Punjabi News-Patiala Web Desk
Chandigarh, December 15
Maggi Noodles: The prices of Maggi noodles, a favorite of millions of Indians as a fast food and prepared in two minutes according to the company’s claim, may increase from the New Year i.e. January 1. The reason for this is that Switzerland suspended the Most-Favored-Nation (MFN) clause of its 1994 Double Taxation Avoidance Agreement (DTAA) with India. is The change will come into effect from January 1, 2025 and will increase operating costs for Swiss companies in India, including Maggi maker Nestle.
This case is related to a 2023 judgment of the Supreme Court (Supreme Court of India), which said that the MFN clause in the DTAA is not automatically applicable. The apex court clarified that India should issue clear notifications to implement this section. Switzerland contested this interpretation and said that the decision deprives the country of the benefits that India gives to countries with more favorable tax treaties. Swiss officials highlighted loopholes in the tax system in this regard and said that India’s agreements with countries like Slovenia and Lithuania offer better terms.
Thus citing the unreasonable approach and lack of coordination, Switzerland has decided to suspend the MFN clause. The consequences of this decision will mainly be borne by Nestlé and other enterprises related to Switzerland. With the MFN clause no longer applicable, these companies will now face a higher corporate tax rate of up to 10 per cent, compared to the earlier reduced rate of 5 per cent.
Nestlé had appealed for a reduction in the tax rate but the Supreme Court dismissed the petition in this regard. As a result of the increase in tax liabilities, Nestlé’s profits will decrease and this will force it to change its pricing strategies in India.
