Philippine President Ferdinand R. Marcos, Jr. has signed the Capital Markets Efficiency Promotion Act (CMEPA) into law on 30 May 2025, which goes into force on 1 July 2025.
Philippine President Ferdinand R. Marcos, Jr., has signed the Capital Markets Efficiency Promotion Act (CMEPA) into law on 30 May 2025.
The CMEPA law, which aims to encourage more Filipinos to invest in the country’s capital markets, will go into effect on 1 July 2025.
Finance Secretary Ralph G. Recto welcomes the enactment of Republic Act No. 12214 or the Capital Markets Efficiency Promotion Act (CMEPA), which will encourage ordinary Filipinos to invest in the Philippine capital markets and promote inclusive growth.
“We thank the President for signing the CMEPA into law. This is a landmark reform that brings capital market investments closer to the Filipino people. By making investment channels clearer, more affordable, and more accessible, especially for small investors, we open the door to greater financial inclusion for our people,” Secretary Recto said.
The key features of the law are the standardisation of the tax on interest income at 20% to promote equity and eliminate tax arbitrage.
The law then reduces the Stock Transaction Tax (STT) from 0.6% to 0.1% and the Documentary Stamp Tax (DST) on the original issue of shares of stock from 1% to 0.75%.
It also exempts from DST the original issuance, redemption, or transfer of mutual fund shares and certificates or proof of participation in mutual funds or investment trust funds.
Other key measures of CMEPA are:
- Imposes a 20% final tax on interest income;
- Imposes a 15% final tax on net capital gains from the sale or exchange of shares in domestic and foreign companies, excluding those sold through stock exchanges;
- Imposes a 20% final tax on royalties earned as passive income;
- Abolishes tax exemptions on the passive income of government-owned and controlled corporations (GOCCs), ensuring they are taxed at the same rates as other entities.
Earlier, the Philippine Congress approved the Capital Markets Efficiency Promotion Act (CMEPA) on 5 February 2025, following its Senate passage on 29 January 2025.
