SEC says no new tax, just standardization

THE Securities and Exchange Commission (SEC) said the 20% tax on long-term deposit interest, under the newly implemented Capital Markets Efficiency Promotion Act (CMEPA) is not a new levy but part of a standardization move.

- Revin Mikhael D. Ochave

The corporate regulator said the 20% tax on interest income from long-term deposits under the CMEPA has “standardized the tax rate across investment instruments.”

“The new law merely standardizes the tax on interest income for all types of deposits,” SEC Chairperson Francisco Ed. Lim said in an emailed statement over the weekend.

“The tax code previously discriminated against short-term deposits by unduly burdening them just because they cannot keep cash in banks for longer periods,” he added.

The SEC issued the statement after the CMEPA faced backlash for removing the tax exemption previously enjoyed by long-term deposits.