On July 1, 2025, a new capital markets tax law went into effect with the goal of making investing more accessible, profitable, and affordable for Filipinos.
Find out what this new law might mean for you below.
What is the Capital Markets Efficiency Promotion Act (CMEPA)?
The Capital Markets Efficiency Promotion Act (CMEPA) aims to encourage more people to invest in Philippine capital markets, such as those for bonds and stocks.
CMEPA introduced changes to the tax code to reduce transaction costs, maximize profits, and simplify taxes on similar financial transactions and products, among other reforms.
On a broader scale, the reforms may help local capital markets become more competitive with their regional counterparts.
How can CMEPA affect you as an investor?
CMEPA can affect how much you’ll pay when buying and selling investments. Here are a few highlights to know:
1. Lower taxes on stock transactions
The stock transaction tax (STT) has been reduced from 0.60% to 0.10% of the transaction amount. This is the tax you must pay each time you’ll sell shares of a publicly listed company through the local or foreign stock exchanges.
If you’ll sell P1,000 worth of shares, you will only pay P1 in STT under the new law instead of P6 previously.
The higher your transaction amount, the more you’ll save on STT. For example, transactions worth P500,000 will now be charged P500 instead of P3,000.
Additionally, the documentary stamp tax (DST) on the original issuance of shares has also been lowered from 1% to 0.75% of the shares’ par value.
2. Lower taxes on mutual funds and Unit Investment Trust Funds (UITFs)
Under CMEPA, you won’t need to pay taxes on earnings gained from redeeming units of a UITF or shares of a mutual fund. Gains from such pooled funds are now exempt from gross income computation.
The new law also removes DST from transactions involving mutual funds and UITFs. These changes can help make pooled funds more attractive, especially if you’re looking for a beginner-friendly investment.
3. Standardized tax on interest income
Interest earned through bank deposits and similar financial products will be taxed at a 20% standardized rate. This replaces previous tax rates on interest income that varied from exempt to 20%.
The new rate also applies to interest income from foreign currency deposits, which was previously taxed at only 15%. This move allows for equal tax treatment of both local and foreign currency deposit accounts.
4. Incentives for Personal Equity and Retirement Account (PERA) contributions
To encourage retirement savings, employers that match or exceed their employees’ PERA contributions will get an additional 50% tax deduction on their contributions, capped at P100,000 annually.
PERA is a government-initiated voluntary savings and investing program that seeks to help Filipinos prepare for retirement.
Other features to know
- Capital gains from trading unlisted foreign and local stocks are now taxed at 15%. Foreign shares were previously subject to higher tax rates.
- Interest income and gains from certain bonds issued by the Philippine government may be exempt from taxes.
By simplifying taxes on passive income and cutting transaction costs, CMEPA can help invite more Filipinos to invest.
More investors may lead to better liquidity over time, which can make it easier and more rewarding to participate in local financial markets.
