President Ferdinand Marcos Jr. on Monday directed the Securities and Exchange Commission (SEC) to streamline investment processes, remove chokepoints and lower investor costs for Filipinos seeking to grow their wealth and financial security.
Marcos said this on the day the new law on investment taxation — Republic Act No. 12214 or the Capital Markets Efficiency Promotion Act (CMEPA) — took effect. He marked the occasion by ringing the opening bell at the Philippine Stock Exchange.
Marcos said to ensure the effective implementation of CMEPA, which he signed on May 30, he is directing the SEC to “streamline its procedures, remove bureaucratic bottlenecks, [and] reduce transaction costs within its control [as well as to] undertake the necessary changes to fulfill your responsibilities in these changing times.”
“Equally important, let us also recognize that market integrity is a shared responsibility. I urge all market participants and stakeholders to uphold transparency, fairness, and good governance. By working together in good faith, we can build an industry that earns the market’s trust both here and abroad,” he added.
The enactment of CMEPA enhances the Philippines’ competitiveness in the Association of Southeast Asian Nations or Asean region and strengthens the foundations of the domestic capital market.
Marcos said that prior to the new law, investors were required to pay 0.6 percent tax, considered the highest in Asean. It is six times higher than in Singapore and Malaysia.
Under the CMEPA, the rate is now lowered to 0.1 percent, which means an investor who is buying P10,000 worth of stocks only needs to pay P10 instead of P60 in tax. The tax rate on interest income is also fixed at a uniform 20 percent.
The new law also removes other tax, such as the documentary stamp tax on mutual funds and unit investment trust funds (UITFs). Mutual funds and UITFs are popular investment instruments, mostly favored by young professionals and middle-class savers.
Marcos said the law promotes retirement security since CMEPA offers a 50 percent additional tax deduction to employers who match or exceed employee contributions to the Personal Equity and Retirement Account (PERA).
The tax incentive aims to encourage employers to help their workers build long-term financial stability, he added.
Meanwhile, Marcos said the tax amendments improve the country’s tax system and “encourage more Filipinos to invest in our capital market”. It also ensures that benefits are not limited to the wealthy, stock traders and professionals.
“It is for every Filipino who dreams of better financial security. It empowers the small business owner, the young professional, and the overseas Filipino worker to start investing their hard-earned money to build a better future,” he said.
In addition, Marcos said CMEPA will generate P25 billion more in net revenue until 2030, which will be used to build roads, bridges, hospitals and schools, while some of the funds will go to social safety net programs.
