The Department of Finance (DOF) has debunked misinformation surrounding the Capital Markets Efficiency Promotion Act or CMEPA, clarifying that the law does not impose a new tax, but rather standardizes existing rates to correct long standing inequities in the tax system.
Contrary to claims of a “new tax,” the CMEPA, the DOF said, sets a uniform 20 percent tax on interest income, replacing a tiered system that disproportionately benefited the wealthy. Previously, only 0.4 percent of deposits—those locked in for longer periods—enjoyed preferential rates of 5 percent or 12 percent, or complete exemption, while the vast majority (99.6 percent) already paid 20 percent. This favored long-term savers, typically wealthier individuals, and disadvantaged ordinary Filipinos who needed liquidity.
The new flat rate levels the playing field without applying retroactively—existing deposits made before 1 July 2025, retain their tax-exempt or reduced-rate status until maturity. Exemptions for savings in SSS, GSIS, and Pag-IBIG remain intact.
Beyond income tax adjustments, CMEPA introduces broader reforms to spur investment. These include:
- Cutting the stock transaction tax (STT) from 0.6 percent to 0.1 percent
- Reducing documentary stamp tax (DST) on the issuance of shares from 1 percent to 0.75 percent
- Removing DST on mutual fund transactions
- Uniform 0.75 percent DST on foreign-issued debt instruments to ensure neutrality
- Expanding definitions of “securities” and “passive income” for clarity and consistency
The law also promotes retirement savings by offering private employers an extra 50 percent tax deduction on contributions to employees’ PERA accounts. Meanwhile, it ends GOCCs’ tax exemptions to ensure consistent treatment across public and private entities, though PHILGUARANTEE’s exemptions are retained to preserve support for low-cost housing.
The DOF emphasizes that CMEPA aligns with its broader push for fair, transparent, and growth-oriented tax policiesthat remove inefficiencies and promote inclusive economic participation.
