The Securities and Exchange Commission (SEC) expects more Filipinos to bolster their retirement funds through the Personal Equity and Retirement Account (PERA), following the enactment of Republic Act No. 12214, or the Capital Markets Efficiency Promotion Act (CMEPA).
A key provision of CMEPA is a 50-percent additional tax deduction for private employers who contribute an amount equal to or greater than their employees’ PERA contributions.
PERA, established under Republic Act No. 9505 (the PERA Act of 2008), is a voluntary retirement savings program. It supplements existing retirement benefits from the Social Security System, Government Service Insurance System, and employer-sponsored plans. The program offers tax benefits not available in other retirement investment products, encouraging Filipinos to save for their future.
“The CMEPA strengthens the role of PERA by offering stronger incentives for long-term savings,” SEC chairperson Francis Lim said.
“It encourages companies to support their employees’ retirement planning while simultaneously increasing the capital available in the financial system, stimulating the local stock market,” said Lim.
The SEC lauded the Marcos administration for the “landmark measure” that lowered tax rates for several capital market-related transactions.
“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 said.
Among the significant reforms 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.
The documentary stamp tax (DST) on the original issuance of shares of stock was reduced to 0.75 percent from 1 percent of par value. This aims to incentivize companies seeking capital through initial public offerings (IPOs) or follow-on equity listings.
Instead of imposing a new tax, the CMEPA standardizes the final withholding tax on interest income at 20 percent, simplifying compliance across investment instruments.
The law also harmonizes the capital gains tax to a flat 15 percent on shares of foreign corporations, aligning the Philippine tax regime with global standards and potentially attracting more foreign investments.
