SEC Welcomes Enactment of CMEPA for More Accessible and Efficient Capital Market

​The Securities and Exchange Commission (SEC) applauds the Marcos administration’s strong resolve to deepen the Philippine capital market with the enactment of Republic Act No. 12214 or the Capital Markets Efficiency Promotion Act (CMEPA).

President Ferdinand R. Marcos, Jr. on May 29 signed into law the CMEPA, a landmark legislation that lowers the tax rate for several capital market-related transactions in a bid to encourage wider investor participation among both local and foreign investors.

“We welcome the enactment of the CMEPA, a key piece of legislation that strengthens our ability as regulator to create an environment that not only increases capital market accessibility to more Filipinos, but also builds trust and confidence in long-term investing,” SEC Chairperson Emilio B. Aquino said.

“Together, these significant tax reforms pave the way for a more dynamic capital market that will foster a robust and investor-friendly financial ecosystem,” he added.

Salient provisions under the CMEPA include the reduction of the stock transaction tax to 0.1 percent from 0.6 percent, as well as the lowering of the documentary stamp tax (DST) on the original issue of shares to 0.75% from 1%, which are seen to promote greater market liquidity and investor participation.

The removal of the DST on mutual funds and unit investment trust funds (UITFs), along with the tax exemption on income derived from the redemption of such units, will encourage more Filipinos to participate in long-term investment vehicles and deepen our capital markets.

The CMEPA further standardizes the final withholding tax on interest income at 20 percent, simplifying compliance across investment instruments. Meanwhile, the harmonization of the capital gains tax to a flat 15 percent on shares of foreign corporations aligns the Philippine tax regime with global standards and helps attract more foreign investments.

The new law is also seen to attract more Filipinos to increase their retirement funds through Republic Act No. 9505, or the Personal Equity and Retirement Account (PERA), by enabling employers to claim an additional 50 percent tax deduction for PERA contributions, provided they match or exceed the employee’s contribution.

“Since its enactment, the SEC has been advocating for more Filipinos to take advantage of the PERA to augment their employee-provided retirement funds. With CMEPA, we hope more people will see value in investing in PERA to encourage financial independence in their retirement years,” Mr. Aquino said.