SEC supports lower taxes on stock transactions

The Securities and Exchange Commission (SEC) supports the proposal to boost and improve the competitiveness of the Philippine capital market through the reduction of taxes on stock transactions.

Albay 2nd District Representative Jose Ma. Clemente “Joey” Salceda on August 23 filed House Bill No. 8958, or the proposed Capital Markets Efficiency Promotion Act, that seeks to lower taxes on stock transactions to attract more investors into the market.

The bill has since undergone deliberations at the committee level and has been substituted by House Bill No. 9277, filed on September 21.

The proposal aims to bring the stock transaction tax (STT) down to 0.1% of the stock value from the current rate of 0.6%. The tax on dividends of foreign nonresidents will likewise be reduced to 10% from 25%.

Rep. Salceda, who also heads the House Ways and Means Committee, hopes that the lower taxes will bring them at par with regional counterparts, and encourage more local and foreign investors to participate in the Philippine capital market.

“The SEC welcomes the efforts of our legislators to boost the capital market, as this recognizes the contribution and potential of the financial sector to help in the development of the Philippine economy, toward easing and improving the lives of all Filipinos,” SEC Chairperson Emilio B. Aquino said.

“We will work closely with our lawmakers to ensure that new laws and policies will be reflective of the needs and demands of the market and investors, while still balancing the Commission’s role as regulator,” he added.   

The SEC has been stepping up efforts to encourage more investors into the capital market.

Recently, the SEC shortened the settlement cycle from three days to two days after the trade date by amending the 2015 Implementing Rules and Regulations of Republic Act No. 8799, or the Securities Regulation Code, through SEC Memorandum Circular No. 11, Series of 2023.

Funding portals have also been empowered by the Commission to act as registrars of qualified institutional and individual buyers, which eliminates the need for these portals to use third party institutions to assist potential investors with their applications as qualified buyers.

Further, the SEC has cited the potential of short selling to boost trading activity in the Philippines as shown by the approval of the Philippine Stock Exchange Guidelines on Short Selling Transactions in 2018.