How did the Philippines level its tax treatment of imported and local distilled spirits?

On February 22, 2012, the Dispute Settlement Body (DSB) of the World Trade Organization (WTO) found the Philippines to have violated its national treatment obligation on distilled spirits, urging the government to undertake the required correction to the relevant tax laws. The body ruled in favor of the European Union, which filed the complaint on July 29, 2009, alleging that the Philippines had discriminated against imported distilled spirits by taxing these products at higher rates than distilled spirits derived from sugar and other designated materials. Under the national treatment principle, a contracting member state is committed to apply its internal taxes equally on both imported and locally produced products covered.On January 28, 2013, the Philippines notified the WTO that it had complied with the decision of the DSB by enacting the Sin Tax Reform Law of 2012.It turns out that the Sin Tax Law had taxed local spirits at a higher rate compared to imported ones. This is documented in this note, along with a discussion on the implications of the distortion on the local markets of distilled spirits.