María Catalina Jaramillo Hernández
Brigard Urrutia, Bogotá
cjaramillo@bu.com.co

Juan Manuel Hoyos
Brigard Urrutia, Bogotá

In an unexpected turn of events in regard to Colombia’s tax landscape, the government has reinstated a one per cent stamp tax rate, effective from February 2025, through Decree 175 of 2025. This marks the end of nearly two decades during which the stamp tax was gradually eliminated, with the tax reaching a zero per cent rate in 2010.

This change in the rate of the stamp tax resulted from an emergency effort by the national government following the declaration of a public calamity.

In any case, and notwithstanding the reasons that resulted in the abovementioned increase, we believe it is worth asking: does reactivating a historically ineffective tax truly serve a greater public good? Was this the most efficient and equitable instrument available to meet fiscal needs in an emergency?

A brief history: from burden to repeal

The stamp tax is one of the oldest forms of taxation in the world. While some trace its origins back to Rome during the time of Justinian, the modern version of the tax can be more directly linked to developments in 17^th century Europe.^[1] In Colombia, the stamp tax was historically levied on the execution of a wide variety of documents, including contracts, letters of credit and promissory notes, among others.

By the early 2000s, however, the tax had become obsolete in both its design and function. By 2006, the Tax Office had registered the lowest stamp tax revenue in recent years, highlighting the diminishing fiscal relevance of this tax.

In response, Law 1111 of 2006 introduced a gradual reduction of the stamp tax rate, explicitly aimed at its elimination. The zero per cent rate finally took effect in 2010, justified by the growing consensus that the tax was ineffective, costly to administer and increasingly irrelevant in a digitised and service-based economy.

Why has it been brought back?

Fast forward to 2025 and through Decree 175, the Colombian government has increased the stamp tax rate from zero per cent to one per cent, citing the urgent need to collect funds to address the public calamity suffered by the country.

This change was made under the exceptional powers granted by Section 215 of the Colombian Constitution and enabling Law 137 of 1994. The revenue generated by the increase in the stamp tax rate will support public order, recovery and bolster the economy in certain areas of the country (mainly the Catatumbo region).

While the humanitarian rationale is clear, there are concerns about whether the stamp tax is the appropriate tool for achieving these goals.

How the stamp tax works

The stamp tax is a documentary tax applicable to documents executed in Colombia or those executed abroad that give rise to obligations that are enforceable in Colombia.

To be subject to this tax, the obligations contained within the document must exceed 6,000 tax value units (UVTs), which in 2025 corresponds to CLP 298,794,000 (~$72,000).

As established by Decree 175 of 2025, the tax applies from February 2025 through to 31 December 2025 at a rate of one per cent on the taxable amount, which is the total value of the document.

Despite its reactivation, the stamp tax continues to be subject to numerous exemptions under Chilean current law, with over 50 specific cases are excluded from the tax.

Meanwhile, the compliance burden remains high. The administration of the tax often requires manual procedures, oversight by notaries, financial institutions and intermediaries, and strict documentation. In an economy where electronic contracts and digital transactions are increasingly prevalent, this tax is not only outdated, but also fails to guarantee the generation of meaningful revenue.

An inefficient revival

Quoting the International Monetary Fund (IMF) in its 2002 study on Colombia’s fiscal framework: ‘One way to evaluate the success of a tax within the fiscal system is by analyzing its revenue generation, implementation method, and cost to society. In many cases, administrative costs outweigh the effort required from taxpayers, making the tax inefficient, insufficient, and biased in investment decisions, thereby working against economic growth.’^[2]

This statement encapsulates the key issue with reintroducing the stamp tax: its inefficiency. The cost of compliance, coupled with its regressive nature and limited revenue potential, risks outweighing the benefits.

Additionally, it sends a conflicting message to investors, who value stability and predictability in regard to tax policy.

Conclusion: a tax out of time

While the government’s intention to raise funds for an emergency is valid and commendable, the choice of the stamp tax as the vehicle to do just that is questionable. There are more modern, equitable and administratively efficient ways to collect emergency revenue.

Reactivating a tax that had been purposefully phased out due to its inefficiency and irrelevance to current business practices raises serious concerns about the direction of tax policy in Colombia. Rather than reviving old mechanisms, the country would be better served by reinforcing existing, more efficient tax instruments or designing new tools tailored to contemporary economic realities.

In short, while the transitory one per cent stamp tax rate may generate short-term funds for the government, it does so at the cost of long-term clarity and coherence in Colombia’s tax system.

Lastly, it is also important to highlight that, under Decree 175 of 2025, the one per cent rate is scheduled to apply only until 31 December 2025. If the government were to consider extending this measure beyond that date, we believe it would not be possible to do so on the same legal basis (namely, the exceptional powers under Article 215 of the Constitution and Law 137 of 1994).

Instead, such an extension would require a different legal mechanism, such as formal legislation passed by the National Congress of Chile, which would demand broader political and economic justifications for doing so.