Manila: Finance Secretary Ralph Recto vowed the efficient rollout of the landmark capital markets reform to unlock broader investor participation and drive inclusive economic growth.
According to Philippines News Agency, Republic Act No. 12214, or the Capital Markets Efficiency Promotion Act (CMEPA), aims to make the Philippines a more attractive and competitive investment destination by bringing long-awaited reforms to its capital markets. The law supports President Marcos' goal of driving long-term economic growth by empowering more Filipinos to invest and attracting capital that translates to more jobs, higher incomes, and shared prosperity.
Recto emphasized the importance of building a Philippine capital market that is dependable and inclusive, serving as a robust engine of national development. He stated that this reform provides a predictable environment for investors and signals that the capital market is accessible to all Filipinos.
CMEPA introduces various measures to enhance market participation and growth, including reducing the Stock Transaction Tax (STT) from 0.6 percent to 0.1 percent. This adjustment aligns the Philippines with regional markets, making investments in the Philippine Stock Exchange (PSE) more cost-competitive. Additionally, the law removes the documentary stamp tax (DST) on mutual funds and unit investment trust funds, which are popular among young professionals and middle-class savers.
The reform also includes a reduction in the DST on the original issue of shares of stock from 1 percent to 0.75 percent, and a uniform 0.75 percent DST on bonds, debentures, and certificates of stock or indebtedness issued in foreign countries. This ensures equitable taxation of similar financial transactions. Definitions of 'passive income' and 'securities' have been clarified to ensure consistent tax treatment.
To simplify compliance and level the playing field for all investors, CMEPA standardizes the tax on interest income at 20 percent. It also incentivizes retirement savings by offering private employers an additional 50 percent tax deduction on contributions to the Personal Equity and Retirement Accounts that match or exceed their workers' contributions.
CMEPA is projected to generate over PHP25 billion in revenues from 2025 to 2030, which the Department of Finance said would support infrastructure development and social safety net programs for Filipinos. President Ferdinand R. Marcos Jr. and Recto marked the law's effectivity with a ceremonial bell-ringing at the PSE on July 1, 2025.
Marcos highlighted the reform's potential to enhance financial security for all Filipinos, empowering small business owners, young professionals, and overseas workers to invest in their futures.
