Philippine government officials are setting their sights on a 600 percent increase in the volume of stock market transactions once the Capital Market Efficiency Promotion Act (CMEPA) is signed into law.
A consolidation of Senate Bill No. 2865 and House Bill No. 9277, CMEPA intends to lower the stock transaction tax to 0.1 percent from the current 0.6 percent.
“The premise of reducing the tax is that the volume will go up,” Special Assistant to the President for Investment and Economic Affairs Secretary Frederick Go told participants during InvestPH 2025 conference Wednesday at the Philippine Stock Exchange.
“It’s very clear to me that the biggest problem in our market today is liquidity. So we need to boost liquidity in the market and I cannot think of a better way that the government can act on than to reduce the friction cost,” Go added.
CMEPA aims to simplify the process of taxation on passive income in the country, by standardizing the final withholding tax to 20 percent, while reducing the documentary stamp tax on the original issuance of shares to 0.0075 percent from the current 0.01 percent.
The Act also provides income tax exemptions on gains from redemption of unit investment trust funds. It also removes the documentary stamp tax on mutual funds.
In February, the Senate and the House of Representatives approved the bicameral conference committee report on CMEPA.
There is a strategic advantage when investors place their money in the Philippines, Finance Secretary Ralph Recto said at the same investors’ conference.
“We are strategically positioned as the gateway to Asean, the most dynamic and fastest-growing region in the world,” Recto said in his keynote speech.
Since the Philippines exited from the Financial Action Task Force gray list last month, Recto said CMEPA is expected to magnify the Philippines as a safe haven for legitimate investors.
