1. What is CMEPA?
The Republic Act No. 12214 or The Capital Markets Efficiency Promotion Act (CMEPA), is a law signed on May 29, 2025, aimed at boosting the efficiency, liquidity, and inclusiveness of the Philippine capital markets.
2. When does CMEPA take effect?
CMEPA is effective July 1, 2025.
3. What are the key changes under CMEPA that investors should know about?
· Stock Transaction Tax (STT) on the sale of listed shares is reduced from 0.6% to 0.1%
· Documentary Stamp Tax (DST) on original issuance of shares reduced from 1% to 0.75%
· DST exemptions for mutual fund and UITF issuance, redemptions, and transfer
· Unified final withholding tax rate of 20% on interest income
· Capital gains from the sale of unlisted foreign shares are subject to a 15% final tax, aligning with the rate for unlisted domestic shares.
· Employers that contribute to employees’ PERA accounts (equal to or greater than employee contributions) receive a 50% additional tax deduction.
· A uniform 0.75% DST applies to foreign-issued bonds, debentures, and similar securities
4. What transactions are not covered by CMEPA?
· Buying stocks
· Listed peso bonds (no change to tax rules on bonds traded locally)
· Cash and stock dividends
· Foreign exchange (forex) transactions (not affected by CMEPA)
· Real estate or property sales (no change to capital gains tax on these)
· Cryptocurrency or digital assets
· Personal or corporate income tax rates
· Tax filing and payment processes (no new forms or requirements for investors)
5. How does the lower STT affect your trading costs?
Here’s a side-by-side comparison:
Before CMEPA After CMEPA
With lower STT, investors and active traders can reach breakeven faster and retain more of their gains from each trade. Long-term investors benefit by preserving more of their proceeds at exit, while active traders reduce cumulative costs from frequent selling.
6. What is the expected impact of CMEPA on the market and economy?
· Increased market liquidity and trading activity
· Greater investor participation
· Enhanced competitiveness of the Philippine capital markets with the ASEAN region
· Promotes long-term economic growth
Sources:
https://www.officialgazette.gov.ph/2025/06/18/republic-act-no-12224/ https://documents.pse.com.ph/CircularOPSPDF/CN-2025-0026.pdf?fbclid=IwY2xjawLCO_JleHRuA2FlbQIxMABicmlkETF5THhVQUNua2VnUUJTaUdWAR414Pdi8PLzDzTozrW1xojIZ0hPugYMX1YuomsS2KhJBYr53uCdFW9Oy6UDlw_aem_a_TBip7p65RdEPTqdslTjw