CMEPA targets the wealthy–DOF

The Department of Finance (DOF) has clarified that a new law will not tax the savings of ordinary Filipinos, as it only standardizes the tax rate on interest income, eliminating the unfair preferential treatment previously enjoyed by the wealthy.

- BY DERCO ROSAL

Finance Secretary Ralph G. Recto said the passage of the Capital Markets Efficiency Promotion Act (CMEPA) would only remove preferential or lower taxes for wealthy depositors, setting a uniform 20-percent rate on interest income across the board.

"CMEPA does not impose a new tax, instead standardized the tax rate on interest income to correct an unfair system that favored the wealthy," Recto said in a statement on Thursday, July 17, countering the false reports circulating online.

"Under CMEPA, the tax on interest income has been equalized at 20 percent to simplify compliance, eliminate confusion, and ultimately level the playing field for all Filipinos," the DOF said.

It noted that even before the law was enacted, a 20-percent final tax rate on interest income from short-dated bank deposits or those maturing in less than three years was already in place. It was under the National Internal Revenue Code (NIRC) of 1997 or the Tax Code.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that a majority, or about 99.6 percent, of total deposits were already subject to the 20-percent tax rate, whereas the remaining 0.4 percent "enjoyed preferential rates."

In particular, deposits maturing in more than five years were "tax exempt," the DOF pointed out.