DS: Uruguay — Tax Treatment on Certain Products

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 18 June 2002, Chile requested consultations with Uruguay with regard to the tax treatment applied by the latter to certain products.

In particular, Chile referred to Uruguay’s Internal Specific Tax (“IMESI”) which taxes the first alienation and the importation by non-taxpayers of certain goods which include, inter alia, beverages (alcoholic beverages, juices, mineral water), tobacco and cigarettes, automobiles, lubricants and fuel. The fiscal framework for the IMESI is contained in various legal instruments, including Chapter 11 of the 1996 “Texto Ordenado”, Decree 96/990 of 21 February 1990 from the Ministry of Economy and Finance, and the bi-monthly Resolutions of the Direction General for Taxation. This framework was recently amended as regards cigarettes by Decree 200/2002 of 3 June 2002.

Chile contended that, in most cases, taxable income for this tax is determined by using a fictitious price. According to Chile, this system would increase the taxable income if compared to the real sales price, especially in the case of foreign goods. Chile submits that the IMESI violates Articles I and III of GATT 1994 because it establishes a tax system based on the use of fictitious prices in order to determine the taxable income. Chile considered that this system discriminates between national and imported products and, in some cases, between imported products depending on their origin. Chile further claimed that this alleged discrimination constitutes a de facto import prohibition as regards certain products.

Chile recalled that in the trade policy review for Uruguay in 1998, this system was subject to some discussion and Uruguay indicated, at the time, that they were in the process of elaborating norms that ensured an equal treatment to all products regardless of their origin.

On 4 July 2002, the European Communities requested to join the consultations. On 5 July 2002, Mexico requested to join the consultations. On 3 April 2003, Chile requested the DSB to establish a panel. At its meeting on 15 April 2003, the DSB deferred the establishment of the panel.


Panel and Appellate Body proceedings

Further to a second request by Chile, the DSB established a panel at its meeting on 19 May 2003. The EC, Mexico and the US reserved their third-party rights. On 4 July 2003, the Panel was composed. On 15 August 2003, the Chair of the Panel informed the DSB that both parties had jointly requested the Panel to suspend its work for a period of 60 days, until 12 October 2003. The Panel has agreed to this request and is suspending its work from 14 August to 12 October 2003. On 12 October 2003, both parties jointly requested the Panel to extend the suspension of its work for another 60 days, until 11 December 2003. The Panel agreed to this request and was continuing to suspend its work until 11 December 2003. On 11 December 2003, both parties jointly requested the Panel to suspend its work for a final additional period of 30 days, until 10 January 2004, in order to formalize a mutually agreed solution over the coming days and notify it to the Dispute Settlement Body, in accordance with Article 3.6 of the DSU. The Panel agreed to this request and is suspending its work from 12 December 2003 to 10 January 2004.


Mutually agreed solution

On 8 January 2004, Chile and Uruguay informed the DSB that they had reached a mutually agreed solution under Article 3, paragraphs 5 and 6 of the DSU.


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