Nestlé India has reassured stakeholders that the recent suspension of the Most Favoured Nation (MFN) status by Switzerland will have no impact on its operations. The FMCG giant, which owns popular brands such as Maggi, Nescafé, and KitKat, explained that the issue is a policy matter between the governments of India and Switzerland, and not related to Nestlé’s business.
MFN Suspension: A Government-to-Government Issue
On December 11, Switzerland announced it was suspending the MFN clause granted to India under the Double Taxation Avoidance Agreement (DTAA). This decision followed a Supreme Court ruling that stated the MFN status cannot be enforced unless it is formally notified under Section 90 of the Income Tax Act. The ruling stemmed from a case involving Nestlé India, where the apex court overturned a 2021 Delhi High Court ruling, which had applied residual tax rates based on the MFN clause in the DTAA.
While the suspension has raised concerns about increased tax liabilities for Indian companies operating in Switzerland, Nestlé India clarified that it was already deducting a 10% withholding tax on cross-border payments. The company emphasized that the policy shift will not affect its day-to-day business operations.
No Impact on Nestlé India’s Operations
A spokesperson for Nestlé India stated that the issue is not specific to the company, and the suspension of MFN status has “no impact” on its operations. The company has consistently complied with Swiss tax regulations, ensuring that 10% withholding tax was being deducted as required.
India remains one of Nestlé SA’s top ten markets, where the Swiss multinational has been operating for over 112 years. As part of its commitment to the Indian market, Nestlé India is investing Rs 6,000-6,500 crore from 2020 to 2025 to enhance its manufacturing capabilities and expand its business in the country. The company currently operates nine factories in India, with a tenth factory under construction in Odisha.
For the financial year 2023-24, Nestlé India reported a robust revenue of Rs 24,393.9 crore, showcasing the company’s continued growth in the Indian market.
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