The proposal for a second tax reform by the current Colombian government has been on the table since late 2023. The President claims that the Constitutional Court banned various provisions in the first tax bill, which was enacted as Law 2277 of 2022 and dramatically increased taxation levels, particularly on oil and mining companies.
Simultaneously with the proposal for a second tax reform, the Colombian government decided to collect the aforementioned taxes by invoking extraordinary powers granted by the National Constitution in circumstances representing a state of internal commotion. The state of public calamity has undoubtedly arisen from the ongoing battle between various drug trafficking groups for territorial control.
By Decree 062 of January 24, 2025, the state of internal commotion was declared for a period of 90 days (extendable for up to two additional periods, the second of which requires Senate approval) in the Catatumbo region of Norte de Santander, the metropolitan area of Cúcuta, and the municipalities of Río de Oro and González in El Cesar.
Although the President’s power to impose new taxes during a crisis has traditionally been exercised by declaring an «economic emergency,» the current government relies on Section 38 of Law 137 of 1994, which empowers the President:
«…to impose fiscal or parafiscal contributions for a single fiscal period or during the period of commotion, to collect contributions or taxes not included in the revenue budget, and to make expenditures not included in the expenditure budget.»
The government intends to impose the following three taxes via Decree 062 of 2025:
1.Value-Added Tax (VAT) on online games of chance and luck.
2.A 1% contribution on coal and oil exports.
3.Stamp tax on transactions exceeding 1 billion pesos.
A key consideration regarding the government’s proposal concerns the interpretation of Section 38 of Law 137 of 1994. This interpretation must necessarily be restrictive. As a result, it is essential to differentiate between a tax and a contribution:
•Taxes are levies that do not generate any direct consideration from the State to the taxpayer.
•Contributions, on the other hand, are levies associated with the execution of public works or other governmental activities that directly benefit those liable for the contribution.
The government may also collect contributions or taxes that were previously established but were not included in the 2025 national budget. These contributions and taxes must correspond to levies already collected at the local level.
In light of this interpretation and underthe rule established in Section 38, the government can only impose fiscal or parafiscal contributions. Therefore, it is not legally viable to decree either a VAT on online games of chance and luck or a stamp tax on transactions that have not been previously taxed.
We will need to monitor how the contribution on companies exporting oil and coal is framed under the state of internal commotion decree. By definition, a contribution is levied in consideration of public works or other governmental activities, which may pose challenges for this measure’s implementation.
While the decree has yet to be issued, the finance minister is already moving forward with the second tax bill. He has made it clear that the taxes imposed under the state of public calamity are intended to be permanent and, as such, will also be included in the new tax reform.
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