By Consultants Review Team
Nestle India said on Thursday that Switzerland's suspension of the MFN (most favored country) provision granted to India will have 'no impact' on its business.
The suspension of MFN status under the Double Taxation Avoidance Agreement (DTAA) is a policy problem between the Indian and Swiss governments and is not 'Nestle-specific', according to the FMCG firm.
Nestle India, which owns iconic brands including Maggi, Nescafe, and KitKat, said it was already "deducting 10% withholding tax" on cross-border payments.
Earlier on December 11, the Swiss government announced the suspension of India's MFN status in response to a verdict by the Supreme Court of India last year, which stated that MFN status under the DTAA cannot be enforced unless notified under Section 90 of the Income Tax Act.
This Supreme Court decision came in a case involving Nestle, and it overturned an earlier verdict issued by the Delhi High Court in 2021, which maintained the implementation of residual tax rates after examining the MFN clause in the DTAA.
This has increased the tax responsibilities of Indian enterprises with operations in Switzerland.
"The issue is not Nestle-specific, but rather a policy matter between India and Switzerland. We would like to inform you that Nestle India was/is deducting a 10% withholding tax, which has no bearing on Nestle India," a Nestle India spokeswoman stated.
India is one of Nestle SA's top ten markets, where it has been operating for 112 years.
It plans to invest Rs 6,000-6,500 crore in the Indian market between 2020 and 2025 to expand its manufacturing capabilities, among other things.
Nestle India, which has nine facilities in Odisha and is planning to open a tenth, had a revenue of Rs 24,393.9 crore in fiscal year 2023-24.
We use cookies to ensure you get the best experience on our website. Read more...
