Philippine Securities and Exchange Commission outlines Capital Markets Efficiency Promotion Act tax reforms including a stock transaction tax cut to 0.1 percent

The Philippine Securities and Exchange Commission published a briefing on the Capital Markets Efficiency Promotion Act (Republic Act No. 12214), flagging expected investor savings and improved stock market liquidity following the law’s effectivity on July 1. The SEC highlighted the reduction in the stock transaction tax to 0.1 percent from 0.6 percent, noting the prior rate had been the highest in the ASEAN region and had discouraged stock market participation, particularly for bulk transactions. The SEC also emphasized that the law standardizes taxation across instruments, including confirming it does not introduce new taxes in relation to the 20 percent tax on interest income on long-term deposits and instead harmonizes the tax on interest income for all types of deposits. Other changes cited include a flat 15 percent capital gains tax on shares of foreign corporations, an additional 50 percent employer tax deduction for Personal Equity and Retirement Account contributions where the employer matches or exceeds the employee’s contribution, and a cut in documentary stamp tax on original issuance of shares to 0.75 percent from 1 percent of par value to support equity capital raising such as initial public offerings and follow-on listings.