The Philippine Stock Exchange, Inc. (PSE) thanked 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,” the bourse said.

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 exchange of asset classes other than equities and facilitates the launch of more products in the local stock market.

It also includes several key provisions that are expected to support capital market development, such as a broader and clearer definition of securities to simplify the tax treatment of various financial instruments, which can accelerate the development of new products such as derivatives.

The PSE said the reduction of documentary stamp tax on the original issuance of shares of stock from 1 percent of the par value to 0.75 percent of the par value of such shares of stock will also 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 employers who contribute an equal or greater amount to their employees' contributions to PERA, is likewise expected to help spur transactions in the stock market.

“PSE would like to thank the Senate of the Philippines 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,” the bourse said.