The Capital Market Efficiency Promotion Act (CMEPA) is set to standardize the 20% tax on interest income from bank deposits, a measure that aims to level the playing field for all depositors in the Philippines.
CMEPA – 20% Tax on Interest Income
While the 20% tax itself is not new, having been in effect since 1998, CMEPA’s key change lies in eliminating previous exemptions and varying rates based on deposit lock-in periods.
Historically, long-term deposits held for over five years were exempt from this tax, and shorter-term deposits faced different rates. The Department of Finance (DOF) clarified that this standardization will remove the advantage previously enjoyed by wealthier depositors who could afford to lock in funds for extended periods.
It is important to note that this standardized tax rate is not retroactive and will not impact existing provident savings programs such as those offered by the Social Security System (SSS), Government Service Insurance System (GSIS), and Pag-IBIG. The move is expected to streamline tax regulations for interest income across the banking sector.
Check this FB POST from the Department of Finance for more clarification. For more news, click HERE.
Source: Gadget Pilipinas
0 Comments