Spirits praise action over Colombian tax regime

Representatives of the European spirits industry have backed the EU’s call for an investigation into what they call Colombia’s “discriminatory” tax system.

Imported spirits brands into Colombia suffer from much higher tariffs than local brands, the EU argues (Photo: Wiki)

The European Union called yesterday (13 January) for a World Trade Organisation probe into Colombia’s spirits tax arrangements and its controversial monopoly system.

Colombia is engaging in “market-distorting and anti-competitive practices” according to the EU, a claim that has been openly supported by trade bodies Spirits Europe and the Scotch Whisky Association.

Colombia is accused of offering considerable and unfair tax savings for local producers that tend to bottle at under 35% abv – below the legal requirement for many imported spirits such as Scotch, which must have at least 40% abv.

Meanwhile, EU spirits producers are “unable to compete in the Colombian market due to the high taxes imposed” on imported brands, Spirits Europe said in a statement. This is despite a free trade agreement existing between the EU and Colombia.

David Frost, chief executive of the Scotch Whisky Association, said: “Scotch Whisky is being treated unfairly in Colombia and is unable to compete against local spirit producers due to the discriminatory tax system and anti-competitive practices of the monopolies.”

Scotch exports to Colombia reached a value of £24 million in 2014, up 7% on 2013. “The removal of tax discrimination and other discriminatory measures would give a major boost to the market,” Frost said.

Colombia signed a free trade agreement with the EU in 2013, committing the country into creating a level market for both local and imported goods.

However, despite the August 2015 deadline for these arrangements to come into effect, no significant progress has been made, leading the EU to request a formal consultation with Colombia under the WTO’s Dispute Settlement Understanding.

“Robust enforcement of international trade commitments underpins EU exports and supports the EU’s growth and jobs agenda,” said Paul Skehan, Director General of Spirits Europe.

“It is a matter of demanding that Colombia complies with its international commitments to respect the principle of non‐discrimination both for taxes and regulatory practices, and to ensure market access on terms that allow EU spirits exports to reach their potential.”