Manila: The public need not worry about the 20 percent tax on interest earned from bank deposits, Malaca±ang said on Friday, as it clarified misconceptions about the implementation of the new tax rates on savings interest. In a press briefing, Palace Press Officer Claire Castro warned the public against 'fake news' about the 20 percent final tax on interest income from bank deposits.

According to Philippines News Agency, Castro emphasized that the 20 percent tax on interest earnings from bank deposits is not a new policy, as it has been in place since 1998, prior to the enactment of the Capital Markets Efficiency Promotion Act (CMEPA). She urged the public to be cautious about misinformation spread by 'fake news peddlers and obstructionists' who aim to create confusion.

Castro elaborated that the tax applies only to the interest earned and not the savings themselves. She assured that savings remain untouched despite the tax. She referenced that the tax implementation can be verified in bank statements or passbooks, clarifying the recent changes involve the removal of preferential rates on deposits locked in for longer maturities.

Before CMEPA, the National Internal Revenue Code of 1997 imposed a 20 percent final tax on interest for deposits with maturity less than three years. Data from the Bangko Sentral ng Pilipinas (BSP) reveal that over 99.6 percent of deposits were taxed at this rate, while a mere 0.4 percent benefited from preferential rates.

Castro illustrated that for PHP100,000 worth of savings, only PHP16.66 will be deducted from the PHP83.33 worth of interest earned, highlighting the minimal impact on savings. She noted that the uniform 20 percent tax rate would significantly aid government funding.

She concluded by emphasizing that the tax revenue would support government programs aimed at enhancing the living standards of citizens.