CMEPA: An active improvement to passive income taxes

As the Greek philosopher and naturalist Theophrastus said, “Time is the most valuable thing a man can spend.” With everything moving at a fast pace, time becomes one of the most important resources anyone can have.

- JOHN ALEXIS S.B. SUMULONG

This is why our government continues to invest in infrastructure, implement policies like the Non-Contact Apprehension Policy (NCAP), and introduce traffic management schemes efforts aimed at helping us reclaim even just a few more minutes of our day. Whether that extra hour is spent being productive at work or enjoying moments with loved ones, its value is undeniable.

In the realm of investment, the principle is just as clear: time is money. And where there is money, tax naturally follows. Amidst the constant hustle of life, we can channel our resources into various passive income streams be it through bank savings accounts or by investing in company stock with the expectation that their value will appreciate over time. These channels allow us to generate extra wealth, offering a path for better financial comfort and security than if we simply held onto idle cash.

With the introduction of the Republic Act (RA) No. 12214, otherwise known as the Capital Markets Efficiency Promotion Act (CMEPA), signed into law on May 29, taxpayers can expect an improved, simpler, and more equitable tax system as regards their passive income. The goal of the new law is to promote and develop the competitiveness of our capital markets. The reforms are designed to encourage investors, be they small or large, to invest more. The law highlighted amendments to the Tax Code, as follows:

SIMPLER, STANDARDIZED TAX ON INTEREST INCOME AND ROYALTIES