CMEPA: Catalyzing inclusive growth through smarter investment taxation

While there is still much work to be done, the goal to democratize access to wealth-building opportunities is clear. If implemented in tandem with inclusive strategies, CMEPA may truly realize its goal of efficient and accessible capital markets.

- JAY A. BALLESTEROS and KARENZA MARIE S. GONZALES

At the core of a civilized society lies a sound and progressive tax system that empowers the state to fulfill its functions and advances public welfare. In the Philippines, taxes accounted for approximately 86% of government revenue in 2024, supporting public expenditures across vital sectors such as education, healthcare, infrastructure, and national defense. This underscores the fundamental principle known as the lifeblood doctrine — that taxation is essential to survival of a nation.

However, beyond its primary role in fiscal adequacy, tax policy is also increasingly used as a tool in strategically regulating economic growth and development. Various governments place much emphasis on the design of tax structures that would not only raise the necessary revenue, but also influence investment and consumption, improve efficiency, and promote equity. Over time, the Philippine tax system has sought to achieve this through the introduction of landmark reforms, such as TRAIN, EoPT, CREATE and CREATE MORE, RPVARA, VAT on digital services, and, recently, Republic Act No. 12214, or the Capital Markets Efficiency Promotion Act (CMEPA).

Signed into law by President Ferdinand R. Marcos, Jr. on May 29, CMEPA introduces significant changes aimed at optimizing the taxation of capital markets through a simplified and equitable tax system.

KEY AMENDMENTS UNDER CMEPA

Effective July 1, CMEPA introduced a range of reforms that incentivize investments in capital markets and reduce transaction costs.