THE Securities and Exchange Commission (SEC) has expressed optimism more Filipinos will be encouraged to beef up their retirement funds under the Personal Equity and Retirement Account (PERA) now that the Capital Markets Efficiency Promotion Act (CMEPA or RA12214) has been enacted into law.
SEC Chairman Francis Lim, in a statement on Monday, said the CMEPA “strengthens the role of PERA by offering stronger incentives for long-term savings.”
“It encourages companies to support their employees’ retirement planning while simultaneously increasing the capital available in the financial system, stimulating the local stock market,” he said.
Among the salient provisions of the CMEPA is the grant of a 50 percent additional tax deduction to private employers who contribute an amount equal to or greater than their employees’ PERA contributions.
The PERA was established under RA9505, or the PERA Act of 2008, which created a voluntary retirement saving program for the public in addition to existing retirement benefits from Social Security System, Government Service Insurance System and employer-sponsored plans.
The program offers contributors tax benefits not available in other retirement investment products.
“At its core, CMEPA is designed to align the Philippine capital markets more closely with regional peers by removing long-standing barriers to investor participation,” Lim said.
“This supports the Commission’s mission to continue introducing reforms that will increase the local market’s competitiveness. The strict implementation of provisions under CMEPA is key toward ensuring broader public participation in the capital market and fostering a deeper investment culture among Filipinos,” he added.
Lim noted that one of the most significant reforms under the law is the reduction of the stock transaction tax (STT) to 0.1 percent from 0.6 percent, which is expected to stimulate market activity by lowering the cost of equity investments.
“Additionally, the documentary stamp tax (DST) on the original issuance of shares of stock has been reduced to 0.75 percent from 1 percent of par value—an incentive for companies seeking capital through initial public offerings (IPOs) or follow-on equity listings,” he said.
Lim also noted that CMEPA 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,” he also said.
