Since the Capital Markets Efficiency Promotion Act (CMEPA) took effect on July 1, 2025, a wave of social media posts has stirred public concern over a supposed “20% tax on savings”. Filipino netizens were alarmed by the misleading posts suggesting that their actual bank savings are now subject to a 20% tax, prompting widespread online reactions.
To set the record straight, the Department of Finance clarified that the 20% final withholding tax applies only to the interest earned on bank deposits, not the principal savings. More importantly, this is not a new tax. It has long been in effect, well before CMEPA was enacted.
As the law’s provisions begin to roll out, it is crucial for taxpayers to understand the amendments introduced by CMEPA to avoid confusion leading to misinformation . On August 5 and 8, 2025, the Bureau of Internal Revenue (BIR) released a series of implementing regulations for public guidance. Below is a summary of these key updates.
Revenue Regulation (RR) No. 18-2025
Effective July 1, 2025, pickup trucks are no longer exempt from excise tax under the newly implemented CMEPA. Under Section 18 of the law, the exemption was repealed, aligning pickups with other taxable vehicle categories. Meanwhile, purely electric vehicles remain exempt, while hybrid vehicles are now subject to a 50% excise tax, depending on their net selling price.
In relation to this, RR No. 18-2025 requires manufacturers, assemblers or importers to file/submit within 15 days from the effectivity of the regulation:
1. A sworn statement on all brands/models of pick-ups as of June 30, 2025; and
2. A notarised list of inventory of on-hand completely built-up pick-ups, including completely knocked-down and semi-knocked-down units that are located within their plant, storage facility or warehouse, or the customs premises, and those in transit for which import entries have been filed with the Bureau of Customs (BOC) on or before June 30, 2025.
The regulation clarifies that the excise tax will not apply on pick-up units included in the duly submitted inventory list as of June 30, 2025, and those units in transit for which import entries have been filed with the BOC on or before June 30, 2025, and withdrawn on or after July 1, 2025.
RR No. 19-2025
As introduced by CMEPA, the revised Documentary Stamp Tax (DST) rate of 75% of 1% is now imposed on the original issuance of shares (Section 174), bonds, debentures, and certificates of stock or indebtedness issued in foreign countries (Section 176), and debt instruments (Section 179). This revised rate applies to transactions made or accomplished on or after July 1, 2025.
To clarify regarding loan-related instruments, RR No. 19-2025 provides that when a loan agreement, promissory note, mortgage, security over personal property, or other related contracts are simultaneously issued and executed, only one DST shall be imposed based on the instrument that yields the highest tax. On the other hand, if only one instrument is prepared, signed, or executed to cover a loan agreement, promissory note, pledge, or mortgage, the DST prescribed under Section 195 of the Tax Code, covering mortgages, pledges, and deeds of trust, shall apply. In such cases, the tax must be computed based on the full amount of the loan or credit granted, and the instrument shall be treated as covering a single taxable transaction.
RR No. 20-2025
The regulation outlines the updated procedures for remittance and compliance related to stock transaction tax (STT), aiming to simplify taxation and encourage broader participation in capital markets. To recall, under CMEPA, the reduced 1/10 of 1% STT of the gross selling price is imposed on the sale, exchange or other disposition of shares of stock and other securities listed through a local stock exchange and to domestic shares listed and traded through a foreign stock exchange.
For transactions involving shares and other securities listed and traded in a local stock exchange, the stockbroker who facilitated the sale is responsible for collecting and remitting the tax to the BIR within five (5) banking days from the date of collection. The stockbroker must also submit a true and complete return detailing all the transactions. On the other hand, for transactions involving shares and other securities listed and traded in a foreign stock exchange, the responsibility to collect and remit the tax within ten (10) banking days and comply with the reportorial requirements falls on the selling shareholder, either personally or through a stockbroker or an authorised representative.
The regulation emphasises that ownership or title to the shares cannot be transferred without payment of the corresponding tax. Additionally, the regulation provides that the sale or exchange of stock and other securities listed and traded through a local or foreign stock exchange by a licensed dealer in securities acting for their own account in the ordinary course of business is considered ordinary income subject to graduated rates for individual and regular corporate tax for corporations.
RR No. 21-2025
The regulation outlines the updated tax rates for the passive income of different types of taxpayers as amended by CMEPA. It clarifies that passive income refers to earnings derived from sources that do not require active engagement in trade or business and are not subject to VAT. It explicitly excludes income generated from the active pursuit of a corporation’s primary purpose and income already covered by VAT.
Additionally, the regulation provides guidance for dealers in securities or other financial intermediaries. For one, they are allowed to claim losses from wash sales of stock or securities, provided such loss arises out of transactions made in the ordinary course of their business. Moreover, the limitation on capital losses does not apply to them.
Lastly, the regulation preserves any tax exemption or preferential rate applicable to financial instruments issued or transacted prior to July 1, 2025. These instruments shall remain subject to the prevailing rate at the time of issuance for the duration of their maturity, subject to the following conditions:
1. The financial instrument was issued or transacted prior to July 1, 2025, as evidenced by the instrument itself or any other relevant government agreement (written or electronic);
2. The instrument or agreement provides for the maturity period of the financial instrument to be beyond July 1, 2025; and,
3. There is no change in the maturity date or remaining period of coverage from that of the original document or agreement, and no renewal or issuance of new instrument to replace the old ones, starting July 1, 2025.
RR No. 22-2025
The regulation cites scenarios where an employer may claim as deduction the contributions it made to its employees’ Personal Equity and Retirement Account (PERA), including an additional 50% of its contributions as introduced by CMEPA.
This additional 50% deduction only applies if the following conditions are met:
1. Employers should have contributed an amount at least equal to the contributions of their employees; and,
2. Employers should have contributed to all of their employees’ PERA.
These deductions apply to qualified employer’s contributions made to PERA on or after July 1, 2025.
Conclusion
CMEPA marks a pivotal shift in the Philippine tax landscape, introducing reforms designed to modernise financial regulations, foster capital market efficiency, and enhance transparency. With the BIR now issuing the implementing regulations, both the taxpayers and businesses are better equipped to navigate the changes and ensure full compliance with the law. These clarifications aim to ensure consistency in tax treatment and provide certainty for investors and financial institutions navigating the transition under CMEPA.
Proper information dissemination is essential to prevent the spread of misinformation, particularly on social media. It is crucial that government agencies, media outlets, and civic organisations work together to ensure that accurate and timely information reaches the public. At the same time, citizens have a shared responsibility to stay informed and verify facts before sharing content online. In an era where misinformation can spread rapidly, critical thinking and digital responsibility are more important than ever.
As published in Mindanao Times, dated 18 August 2025
