"The passage of CMEPA sends a clear message to both domestic and global investors that the Philippines is committed to building deeper, more efficient capital markets. This reform is expected to boost and strengthen liquidity, trading activity, capital formation, and contribute to broader economic growth,” said Special Assistant to the President for Investment and Economic Affairs Frederick D. Go.

Go championed the passage of the law with the legislature. Among other provisions, CMEPA provides for a reduced stock transaction tax from 0.6 percent to 0.1 percent, which is seen as encouraging more trading activity at the Philippine Stock Exchange.

The Securities and Exchange Commission (SEC) also applauded the Marcos administration’s strong resolve to deepen the Philippine capital market with the enactment of CMEPA.

“We welcome the enactment of the CMEPA, a key piece of legislation that strengthens our ability as regulators 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.

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

“The new law reducing the stock transaction tax is great news for investors. It makes buying and selling stocks cheaper (at par with other regional markets), which can attract more people to invest,” said Jonathan Ravelas, senior adviser at Reyes Tacandong & Co.

He added that, “This could lead to more trading, better market activity, and help grow the Philippine stock market overall.”

“We expect CMEPA’s implementation to boost the stock market. The significant reduction in the stock transaction tax will help improve investor returns, increase trading frequency and value turnover, and lead to tighter bid-ask spreads,” said Chinabank Capital Corporation Managing Director Juan Paolo Colet.

He noted that, “The government is moving in the right direction when it comes to market-friendly reforms, and we hope they sustain this by introducing more initiatives to broaden and deepen our public equities market.

“We need to create conditions that help us in getting more listed companies and attracting more stock investors.”

Rizal Commercial Banking Corporation Chief Economist Michael L. Ricafort said CMEPA will help reduce transaction costs, especially for large investors or institutional funds, both local and foreign.

He also noted that it is a “Pleasant surprise that President Marcos vetoed the proposed removal of the tax exemption on non-resident income from Foreign Currency Deposit Units. This could help maintain, especially large FCDU deposits or funds in the country.”

“This is a positive signal as one of the priority tax measures to simplify taxation especially on passive income while collecting more recurring sources of tax revenues for the government,” Ricafort 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 percent from one percent, 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 the Personal Equity and Retirement Account Act (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,” Aquino said.