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  • 🧾CMEPA Is Here—And It’s Not the Villain You Think

🧾CMEPA Is Here—And It’s Not the Villain You Think

Learn what CMEPA means for your savings, MP2, mutual funds, and stock investments. New tax rules explained for regular Filipino savers.

Author

Marianne Lim
July 21, 2025

So, the Capital Market Efficiency Promotion Act (CMEPA) just passed. And like anything money-related in this country, the internet is now a mix of legit explainers, hot takes, and completely unhinged fake news on Facebook.

If you’re confused about what’s actually happening, this issue is for you.

We’re going to unpack what CMEPA is, what’s changing, what’s not, and why it might actually be a good thing for most of us. 

In today’s edition, we’ll go over:

  • What CMEPA is

  • Debunking the Fake News

  • What the Tax Reform means for you

TLDR;

The Bottom Line

  • Savings and deposits are now taxed at 20% (yes, even the 5-year ones that used to be tax-free).

  • Pag-IBIG MP2 still tax-exempt. So breathe. You’re not losing anything if that’s where you save.

  • This change mostly affects the top 0.4% of savers who had the cash to lock away for 5+ years. Everyone else? You were already paying the 20%.

  • Stock trading is cheaper, documentary stamp taxes are lower, and mutual fund rules are now cleaner and simpler.

The content

What is CMEPA?

The Capital Market Efficiency Promotion Act is a tax reform package meant to:

  • Simplify the way we tax savings and investments

  • Apply the same tax rules no matter how much you’re saving or how long you’re saving it

  • Cut some of the taxes that make investing in the PH... well, not that attractive

It’s not some villainous scheme. But it is shaking up old rules that honestly favored only a few.

Debunking the Fake News

There are misleading social media posts going around saying “the government will now tax ALL your savings.” Not true.

Source: Facebook

What’s happening is: All savings and investment income will now be taxed the same, at a flat 20%.

Source: Facebook

Whether it’s a 1-year time deposit or a 10-year bond, MP2, or mutual fund, the rate is the same. And here’s the thing: 20% tax is not new. A lot of us were already paying that 20% since 1998.

Why should you care?

So what does this actually mean for you?

Before CMEPA, only savings that were more than 5 years locked-in were tax-exempt. So if you parked your money in long-term government bonds or special instruments, you got tax-free interest.

But here’s the plot twist:
Only 0.4% of Filipinos actually benefited from that. The top-tier savers. The ones who could afford to lock away millions for 5+ years.

Everyone else (the regular folks who need their cash accessible because life is expensive) were still paying 20% final withholding tax on interest.

So really, CMEPA is about flattening the rules. No more secret doors just for the rich. Whether you’re saving ₱10K or ₱10M, you pay the same 20% rate. 

Here’s What Else Is Changing (That Actually Helps You)

1. Lower stock transaction tax

From 0.6% down to 0.1%. This makes buying/selling local stocks cheaper and more competitive with other countries.

2. Reduced documentary stamp tax

Certain investment instruments used to have annoying DSTs. CMEPA slashes those.

3. More instruments now tax-free or standardized

  • Pag-IBIG MP2, SSS/GSIS provident funds are still tax-exempt. So your MP2 is safe.

  • Mutual funds and UITFs are also now formally tax-exempt upon redemption, something that used to depend on the fund structure or provider.

The Bottom Line: Who Wins?

If you were part of the 0.4% locking away millions for tax-free interest, you might be annoyed. Totally fair.

But if you're part of the 99.6%—people who are saving via MP2, building up mutual funds, or starting to dip into the stock market—this is a good change. It makes things clearer and cheaper.

It’s not perfect. But it’s a meaningful step forward.

Stuff Worth Sharing

The Link Lowdown

Here are a few sources if you want to read further