CMEPA implemented, banks slap uniform 20% tax to interest income

Filipinos will now see a uniform 20% tax on interest earned from savings and investment accounts. As of July 1, 2025, the government is enforcing this standardized tax system.

This change comes after President Ferdinand Marcos Jr. signed Republic Act 12214 or the Capital Markets Efficiency Promotion Act (CMEPA). The bill removes previously lower tax rates on long-term deposits, applying a flat 20% withholding tax regardless of the deposit’s maturity.

Previously, deposits with terms over five years were tax-exempt, while those with shorter maturities were taxed between 5% and 12%. The Department of Finance (DOF) said the move corrects what it called an ‘outdated and inequitable system’, The DOF noted that this disproportionately benefited wealthier individuals.

The DOF noted that 99.6% of deposits in the banking system were already taxed at the 20% rate. The reform simply aligns the remaining accounts under the same standard.

Major banks including Metrobank, UnionBank, and Security Bank have confirmed implementation of the new tax rate. This is across both peso and foreign currency accounts. Security Bank welcomed the reform, noting that the CMEPA promotes fairness in the financial system.

Beyond savings interest, RA 12214 also lowers the stock transaction tax from 0.6% to 0.1% for first-time investors. For example, a PHP 10,000 stock purchase would now incur only PHP 10 in tax down from PHP 60.

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President Marcos said the law will improve financial inclusion, making investing more accessible for ordinary Filipinos and not just seasoned traders. According to Finance Secretary Ralph Recto, the measure is projected to generate over PHP 25 billion in government revenue by 2030. Another effect it has is eventually helping reduce the country’s fiscal deficit.

For those curious on how it will affect you and your investments, here’s a TL;DR table below we got from this megathread via r/phinvest.