Banks slap uniform 20% tax on interest income

Major banks have started implementing new tax rates on interest income from deposit products following the effectivity of Republic Act 12214 or the Capital Markets Efficiency Promotion Act (CMEPA) on July 1.

- By KEISHA TA-ASAN

Metropolitan Bank & Trust Co., Union Bank of the Philippines and Security Bank Corp. confirmed that interest income earned from both peso and foreign currency accounts is now subject to a uniform 20 percent final withholding tax (FWT), regardless of term or currency denomination.

The law aims to create a more inclusive and efficient financial system by simplifying the tax treatment of passive income and capital market transactions, while aligning the country's policies with global standards.

"This reform benefits both institutional and individual Filipino investors who seek to grow and diversify their investment portfolio," Metrobank said in an advisory.