MANILA – Finance Secretary Ralph Recto has pledged the efficient rollout of the landmark Capital Markets Efficiency Promotion Act (CMEPA) to unlock broader investor participation and drive inclusive economic growth.
Republic Act No. 12214, CMEPA, aims to make the Philippines a more attractive and competitive investment destination through long-awaited reforms to its capital markets. The law supports President Marcos Jr.’s goal of fostering long-term economic growth by empowering more Filipinos to invest and attracting capital, which translates to more jobs, higher incomes, and shared prosperity.
“Today, we are building a Philippine capital market that is truly dependable, inclusive, and a robust engine of national development. For investors, this sends a clear message that we are committed to providing a predictable environment for you to prosper in the Philippines. We give you the kind of confidence that only sound policy can deliver. And for ordinary Filipinos, this is a strong signal that our capital market is no longer just for the few — but for the many,” Recto said in a statement Wednesday, July 2, 2025.
CMEPA lowers transaction costs, increases market participation, improves liquidity, and boosts capital market growth. It achieves this by reducing the Stock Transaction Tax (STT) from 0.6 percent to 0.1 percent, aligning the Philippines with regional markets and making investing in the Philippine Stock Exchange (PSE) more cost-competitive.
The law also removes the documentary stamp tax (DST) on mutual funds and unit investment trust funds, popular investment vehicles among young professionals and middle-class savers. Additionally, CMEPA cuts the DST on the original issue of shares of stock from 1 percent to 0.75 percent. It imposes a uniform 0.75 percent DST on bonds, debentures, and certificates of stock or indebtedness issued in foreign countries to ensure equitable taxation of similar financial transactions.
To ensure consistent tax treatment, definitions of “passive income” and “securities” were clarified. CMEPA further standardizes the tax on interest income at 20 percent to simplify compliance, eliminate confusion, and ultimately level the playing field for all investors.
To encourage retirement savings, private employers who match or exceed their workers’ contributions to the Personal Equity and Retirement Accounts are now entitled to an additional 50 percent tax deduction on their actual contributions.
CMEPA is projected to generate over P25 billion in revenues from 2025 to 2030. The DOF stated these revenues would help support the building of more roads, bridges, hospitals, schools, and other social safety net programs for Filipinos.
President Ferdinand R. Marcos Jr. and Secretary Recto led the ceremonial bell-ringing at the PSE on July 1, 2025, marking the effectivity of CMEPA.
“It [CMEPA] is for every Filipino who dreams of better financial security. It empowers the small business owner, the young professional, the overseas Filipino worker to start investing their hard-earned money to build a better future,” Marcos earlier said in his keynote speech. / PNA