Most favored nation clause

Most favored nation (MFN) clauses forge a link between taxation agreements by ensuring that the parties to one treaty provide each other with treatment no less favorable than the treatment they provide under other treaties in areas covered by the clause. SOURCE: IBFD (2016). Most favoured nation: Let us do the research for you!Sep-26-2016.

The most favored nation clause in a bilateral tax treaty is meant to ensure that a treaty partner enjoy not less than the same level of treatment or favor given them under other treaties regarding areas or subjects covered.

It is intended to establish the principle of equality of international treatment by providing that the citizens or subjects of the contracting nations to enjoy the privileges accorded by either party to those of the most favored nation.