Finance Secretary Ralph G. Recto lauded the enactment of Republic Act No. 12214, or the Capital Markets Efficiency Promotion Act (CMEPA), a landmark legislation that seeks to broaden access to capital market investments and promote long-term inclusive growth for all Filipinos.
Championed by the Department of Finance (DOF), CMEPA aligns with President Ferdinand R. Marcos, Jr.’s economic agenda of building a more resilient and inclusive economy through reforms that foster investment and financial participation across all sectors.
“This is a landmark reform that brings capital market investments closer to the Filipino people,” said Secretary Recto. “By making investment channels clearer, more affordable, and more accessible, especially for small investors, we open the door to greater financial inclusion for our people.”
Projections indicate that CMEPA will generate over PHP 25 billion in net revenue gains from 2025 to 2030, supporting the Medium-Term Fiscal Framework (MTFF)’s goal of reducing the country’s fiscal deficit to 3.8% of GDP by 2028.
“This is a major victory for the country,” Recto added. “Inclusive access to investment opportunities and a broader, deeper financial system are vital pillars of long-term, inclusive growth. Bukod dito, ang buwis na malilikom ay gagamitin upang pondohan ang ating mga priority projects sa imprastraktura, kalusugan, edukasyon, agrikultura, at iba pang pampublikong serbisyo.”
Special Assistant to the President for Investment and Economic Affairs Frederick D. Go echoed these sentiments, saying, “The passage of CMEPA sends a clear message to both domestic and global investors that the Philippines is committed to building deeper, more efficient capital markets.”
Key Reforms Under CMEPA
CMEPA introduces sweeping reforms to modernize and rationalize the taxation of passive income and financial instruments, making the Philippine capital markets more competitive, regionally aligned, and investor-friendly.
Among the notable provisions are:
- Standardization of interest income tax at 20% to promote equity and eliminate tax arbitrage.
- Reduction of the Stock Transaction Tax (STT) from 0.6% to 0.1%.
- Lowering of the Documentary Stamp Tax (DST) on original share issuances from 1% to 0.75%.
- DST exemptions for the original issuance, redemption, or transfer of mutual fund shares and similar instruments.
- Uniform DST of 0.75% on foreign-issued bonds and similar instruments, ensuring neutrality.
- Expanded definitions of passive income and securities, streamlining tax treatment across financial instruments.
Additionally, private employers contributing to their employees’ Personal Equity and Retirement Accounts (PERA) will now receive an additional 50% tax deduction on their actual contributions, promoting long-term savings and financial security.
CMEPA also removes select tax exemptions to level the playing field and broaden the tax base. These include:
- Repeal of tax exemptions on passive income earned by GOCCs.
- Removal of pick-up truck exemptions not used for livelihood.
- Fiscal Prudence and Policy Alignment
To ensure alignment with broader economic goals, the President exercised his line-item veto power on certain provisions, including:
- Retaining the tax exemption for nonresident income from Foreign Currency Deposit Units.
- Excluding the DST liability provision for PCSO bettors to protect funding for public welfare.
- Preserving tax exemptions for PHILGUARANTEE to support affordable housing finance.
