Beyond the Noise: 10 CMEPA facts every Filipino should know

In the age of viral posts and clickbait headlines, misinformation spreads fast—especially when it touches on something as sensitive as taxes. One hot topic lately? CMEPA or the Capital Markets Efficiency Promotion Act.

Some say it will charge more tax on your savings. Others claim it will make saving and investing much more difficult for the ordinary Filipino. Finfluencers even claim that it’s anti-poor.

But here’s the truth: CMEPA isn’t out to get you—it’s actually designed to empower you.

Let’s break it down.

1. No, your savings will not be taxed.

Contrary to viral posts, your bank savings, payroll accounts, digital bank funds, and e-wallets are still safe from new taxes.

• Current tax on interest income stays the same at 20%.
•  Your principal (the amount you deposited) remains untaxed.
•  No changes for over 119.09 million depositors in regular bank accounts. That is, 86.7 million from commercial banks, 7.49 million from thrift banks and 24.9 million from rural banks and cooperatives according to BSP’s end-March 2025 data

FACT CHECK: Nothing changes for 119++ million savers. Your hard-earned money is still protected.

2. But what about long-term deposits?

Previously, if you kept your money in a long-term time deposit or investment for over five years, you didn’t have to pay tax on the interest earned.

Under CMEPA:

• That tax exemption is removed.
•  Now, a flat 20% tax applies to all deposit interests, regardless if it’s a short, medium or a long-term deposit – except those booked prior to CMEPA’s implementation on July 1, 2025.

If you’re going to look into it, this isn’t a new tax—it’s simply a removal of a special privilege.

Who are affected: According to the Department of Finance, only 0.4% of depositors use long-term financial products. According to the Bangko Sentral ng Pilipinas, there are over 119.09 million depositors in the Philippines. That means less than 480,000 depositors are affected by the said removal. That’s a small portion of the total.

3. Withholding tax on FCDA deposits will now match peso deposits.

Another alignment under CMEPA: Foreign Currency Deposit Accounts (FCDA) will now have a withholding tax of 20%, up from the previous 15%.

Why? To promote tax uniformity across financial instruments.

This update:

•  Affects only interest earnings (not your principal).
• Impacts only Filipino resident depositors with dollar or foreign currency savings in local banks.
•  Removes the 5% preferential treatment to level the playing field with peso time deposits.

Bottom line: Your FCDA interest income will now be taxed at the same rate as peso deposits—a move toward consistency and fairness.

4. Investors Rejoice: Lower Costs to Buy and Sell Stocks

If you’re among the 1.9 million Filipinos who own or trade publicly-traded stocks in the PSE, this one’s for you:

• Stock Transaction Tax drops from 0.6% to 0.1%.

This reduces the cost of buying and selling shares, making it more accessible for everyday Filipinos to participate in the stock market. By lowering transaction costs, it helps improve potential returns over time—especially for retail investors.

Who benefits?

• 2.86 million stock market investors, as of end-2024 according to the Philippine Stock Exchange
•  4.2 million indirect investors via equity-laced VULs (variable universal life insurance), UITFs, and mutual funds
• 75 million Filipinos with SSS/GSIS/Pag-IBIG stock exposure
•  An average of 200,000 Filipinos who participate in Initial Public Offerings (IPOs) – though this is normally shouldered by the issuing company; This additional cost indirectly affects investors because it slightly affects the value of their investment from day one.

5. No more DST on mutual funds and UITFs.

CMEPA also removes the documentary stamp tax (DST) on these asset classes:

• Mutual fund shares (issuance/redemption)
•  UITF (Unit Investment Trust Fund) certificate issuance

Impact:

• 4 million mutual fund and UITF contributors
• Over 1.8 million subscribers to pooled funds

For new investors, this not only simplifies the process, but also lightens their barrier to entry.

6. Corporate Tax Reforms = More Jobs and Growth

Companies that raise funds by issuing stocks or debt will pay less tax:

• DST on issuance of shares drops from 1% to 0.75%

This affects businesses raising capital—especially small and mid-sized companies.

Result: More capital for expansion, which means more jobs.

7. Bigger PERA incentives for retirement savers.

If you have a PERA (Personal Equity and Retirement Account), here’s good news:

•  Employers contributing to your PERA now get a 50% additional tax deduction.

Benefits:

• Close to 6,000 current PERA account holders, as of end-2024, according to the BSP
•  Encourages more companies to support their employees’ retirement planning.

8. Excise tax back on pick-up trucks.

Pick-up trucks used to enjoy a tax exemption—CMEPA removes that.

•  New tax: 20% excise for units over PHP 1M up to PHP 4M

This affects about 50,000 new pick-up buyers annually – but existing owners and 2nd-hand buyers are not affected.

Why? To curb misuse (like luxury pick-ups being registered as “commercial”) and raise PHP 8-10 billion annually for public services.

9. Tax breaks removed from select GOCCs.

Under CMEPA, 25 outdated laws giving tax perks to select government-owned agencies (GOCCs) are repealed.

This ensures fairness—no more special privileges for a few, while the rest of us follow the rules.

10. Bigger Picture: What does this mean for the economy?

According to the Department of Finance and the National Economic Development Authority, CMEPA could add 0.2% to 0.4% to our GDP per year.

That means more investments, more jobs, and a more inclusive economy.

CMEPA is not designed to make life difficult, from the name of the law itself, it is designed to make participation in the Philippine capital markets more efficient.

So by now you should already understand that CMEPA:

• Encourages more Filipinos to invest
• Helps companies grow
• Makes retirement savings easier
• Aligns us with international standards

CMEPA is not a tax grab. It’s a long-overdue upgrade that makes investing simpler, smarter, and more inclusive for ordinary Filipinos.

Next time you see a viral post saying otherwise—pause, check the facts, and know that CMEPA is on your side.

Because when markets grow, we all grow.

ANDRO LEO “ANDOY” BELTRAN, CIS, CSR, CTP, CUSP and CFMP has 20 years of experience as an entrepreneur, real estate investor, stockbroker, financial literacy advocate, a multi-awarded and sought-after investment educator and public speaker. He is currently the Vice President and Head of Business Development and Market Education Departments together with the OFW Desk of First Metro Securities Brokerage Corporation, a member of Metrobank’s Financial Education Editorial Advisory Board, and the host of “Wais By Choice” Podcast on Spotify and YouTube.

(First Metro Securities Disclaimer: We obtain our information from sources we believe are accurate and reliable, but we cannot guarantee its completeness or accuracy. Our content consists of opinions, not investment recommendations, and you should perform your own research before making any investment decisions. First Metro Securities is not liable for any losses or damages resulting from the use of this information.)

(Metrobank Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)