EU, US win appeal against Philippines spirits tax

EU, US win appeal against Philippines spirits tax

An appeal body at the World Trade Organisation has upheld a previous ruling that the Philippines has illegally inflated tax on spirits imported from the US and European Union.

The appeal panel rejected the notion that higher tax for imported spirits is legitimate in order to defend domestic distillers in the Philippines. Instead, in its ruling late yesterday (21 December), it said that the Philippines has violated international trade law laid down by the General Agreement on Tariffs and Trade (GATT) in 1994.

There is no further right of appeal for the Philippine Government, which means that spirits producers in the EU and US can look forward to lower tariffs on their products in the country. However, it is unclear how soon this will take effect.

Tax on imported spirits in the Philippines can be up to 50 times higher than that applied to local brands, according to Europe's spirits industry trade body, CEPS. In Europe, Brandy de Jerez from Spain stands to gain most from a reduction in Philippines import tax, due to its popularity with local consumers. 

On the other side, the World Trade Organisation (WTO) decision could damage Ginebra San Miguel, the spirits of arm of Philippines-based drinks, food and infrastructure group San Miguel.