DS: Peru — Taxes on Cigarettes

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.


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Summary of the dispute to date

The summary below was up-to-date at


Complaint by Chile.

On 1 March 2001, Chile requested consultations with Peru concerning the Peruvian Supreme Decree No. 158-99-EF of 25 September 1999 modifying appendices III and IV of the General Sales Tax and Selective Consumption Tax Law, which identify the goods subject to the selective consumption tax. Article 1B of the said Supreme Decree amends the tax applied to cigarettes made of dark tobacco, standard cigarettes made of bright tobacco and premium cigarettes made of bright tobacco, setting a different specific tax for each one of these categories of cigarettes ranging from S/0.025 to S/0.100 per unit.

According to Chile, the difference in the amount of the tax appears to be contingent only on the number of countries in which the different commercial brands of cigarettes are marketed — more than three or less than three — a criterion which is a source of concern for Chile, since it could signify discrimination against imported cigarettes, from Chile for example, which, being marketed in more than three countries, are subject to a higher tax than local brand cigarettes. In Chile’s view, this situation, which is damaging to Chilean cigarette exports to Peru, could constitute a violation of the GATT 1994 — in particular, but not necessarily exclusively, of Article III.2 of the GATT 1994 — and of a repeated Appellate Body jurisprudence in this area.


Panel and Appellate Body proceedings

At its meeting of 24 June 2001, the DSB established a Panel further to Chile’s request. None of the Members reserved their third-party rights.



On 12 July 2001, Chile announced its intention to withdraw the complaint on the grounds that the contested measure, i.e. the specific selective consumption tax system applied to cigarettes by Peru, had been amended on 30 June 2001 with the publication of Supreme Decree No. 128-2001 of the Ministry of the Economy and Finance of Peru, which entered into force on 1 July 2001. As from that date, cigarettes are subject to the Peruvian common selective consumption tax system at a rate of 100 per cent, regardless of their origin, price, type or quality of tobacco and/or the number of sales markets. This amendment in the tax regime applicable to cigarettes was the result of a ruling of the Constitutional Court of Peru on 19 June 2001.


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