Applying MFN Clause in Tax Treaties – Indian Court Paves Way!

Sunil Arora, Taxation Partner co-authored an article with Ameet Baid, Taxation, Senior Manager where they wrote about the “Most Favoured Nation Clause in Tax Treaties”.

Most Favoured Nation (MFN) is a concept that is very well known internationally in taxation. It brings parity in the tax treatment for Treaty Partner Countries. In other words, the MFN clause allows one partner country to accord with the other partner country, a treatment that is no less favourable that the one which it accords to other or a third country. In the context of bilateral tax treaties signed by India, the MFN clause entitles a Treaty Partner Country to avail similar benefits (concessional rate and/or restricted scope), that India has subsequently acceded to another Treaty Partner Country.

This article outlines the judgement passed by the Delhi High Court when examining the MFN clause with respect to the India-Netherlands Tax Treaty. For a better view on the matter this articles delves into certain facts in brief concerning the judgement, the decision of the Delhi High Court and the Key Takeaways from the High Court Decision with regards to tax, the DDT regime and the ratio of the judgement not only benefiting the Dutch investors but also those from France, Sweden Spain etc.

Click on the Download link below to access complete article.

Download Pdf