Issue:
Jugos del Valle (Cola Cola) discussed with the State on whether fruit and nectarine fruit drinks should be considered food for tax purposes.
Summary:
The decision refers to a tax discussion of Jugos del Valle’s products. This company is responsible for producing and selling fruit and nectarine fruit drinks among other products.
At the time of presenting the case, the value-added tax (VAT) rate was of 0% for those products considered “food”. In this sense, the plaintiff filed a petition to consider ratifying the company’s criteria for applying the 0% VAT rate. Accordingly, they alleged that fruit and nectarine fruit drinks contain a high percentage of pulp. As a result, they are semi-solid foods and should apply the 0% VAT rate.
However, the tax authority did not answer Jugos del Valle’s request. Then, the company filed the case with the Tax Court, which denied the company’s criteria. After that, the company filed the case (in Spanish, “amparo”) to the Supreme Court. The Supreme Court established that the VAT system is vitiated by inequity with respect to the sale of solid or semi-solid foodstuffs with respect to the sale of liquid foodstuffs, revoking the appealed judgment and granting constitutional protection to Jugos del Valle.