PSE: Investors to Benefit from CMEPA Passage

The Philippine Stock Exhange, Inc. (PSE) expresses it utmost gratitude to President Ferdinand R. Marcos Jr. for signing into law R.A. No. 12214 or the Capital Markets Efficiency Promotions Act (CMEPA).

​The immediate reduction of the stock transaction tax (STT) to 0.1 percent from 0.6 percent is a much-awaited reform that will be beneficial to stock market investors. It is expected to boost trading activity and liquidity in the stock market and PSE's competitiveness against other foreign markets. Prior to the enactment of CMEPA, PSE had one of the highest friction costs in the ASEAN region. CMEPA also expands the application of STT to other securities listed and traded through a local stock exchange which lends certainty to the tax regime applicable to the secondary transfer through the stock exhange of asset classes other than equities and facilitate the launch of more products in the local stock market.
 
CMEPA likewise includes several key provisions that are expected to support capital market development such as broader and clearer definition of securities to simplify the tax treament of various financial instruments, which can potentially accelerate the development of new products such as derivatives; and reduction of documentary stamp tax of the original issuance of shares of stock, which will benefit companies that issue new shares via IPO or subsequent equity listings.
 
In relation to the Personal Equity and Retirement Account (PERA), the grant of additional 50 percent tax deduction on actual contributions by private exployers who contribute an equal or greater amount to their employee's contributions to PERA, is likewise expected to help spur transactions in the stock market.
 
PSE would like to that the Senate of the President and the House of Representatives under the able leadership of Senate President Francis G. Escudero and Speaker Ferdinand Martin Romualdez and the Senate and the House Ways and Means Committees chaired by Senator Sherwin T. Gatchalian and Representative Joey S. Salceda, respectively, for championing the approval of this bill.
 
The Exchange also extends its deep gratitude to Special Assistant to the President for Investment and Economic Affairs Secretary Frederick D. Go for championing this transformative capital market reform and to Department of Finance Secretary Ralph G. Recto for making CMEPA one of the priorities in the government's economic reform agenda.