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This is AI generated summarization, which may have errors. For context, always refer to the full article.
The Philippine Tax Whiz discusses the frequently asked questions regarding the new law, RA 12214, otherwise known as the Capital Markets Efficiency Promotion Act or CMEPA
How does Republic Act 12214 (RA 12214), otherwise known as the Capital Markets Efficiency Promotion Act or CMEPA, change the tax rate on interest income, and who is taxed differently?
RA 12214 makes things simpler by setting a single tax rate of 20% (25% for non-resident foreigners) on most kinds of interest income, like money earned from bank savings, bonds, and time deposits.
This removes the confusion of having different rates for different types of accounts, streamlining the tax system for passive income.
What is the new tax rate on capital gains from selling shares in foreign corporations, and how does it align with local rules?
The new tax rate is 15% on profits you make from selling unlisted shares in foreign companies (those not traded on the Philippine Stock Exchange).
This matches the same 15% rate already used for selling unlisted shares of domestic (PH) companies. So, whether you are selling foreign or local unlisted shares, the tax rate is the same, making it fairer and easier to follow.
What change did RA 12214 make to the Documentary Stamp Tax (DST) on mutual fund and Unit Investment Trust Fund transactions?
RA 12214 exempted mutual funds and Unit Investment Trust Funds from paying Documentary Stamp Tax (DST) on the issuance and redemption of shares or units.
This means that investors no longer need to pay a DST when buying or selling these investment products. This change encourages more people to invest in these collective investment schemes by lowering the cost of entry and exit.
However, it is important to note that this exemption does not apply to Variable Universal Life (VUL) insurance products, even though they are also considered collective investment products.
Why are long-term time deposits now subject to tax, and at what rate?
Under RA 12214, all interest income earned from long-term time deposits (5 bank years or more) will now be subject to 20% final withholding tax. This change aims to create a more standardized tax across different types of deposits and to increase government revenue.
Previously, individuals who saved their money in the bank and kept it there for five years or more enjoyed being tax-free on interest earned.
– Rappler.com
The content provided in this article above is for general purposes only. If you want to know how these regulations affect your business, CONSULT ACG or email us at consult@acg.ph.
Reference: https://web.senate.gov.ph/republic_acts/ra%2012214.pdf
