The Philippine Stock Exchange, Inc. (PSE) has formally expressed its appreciation to President Ferdinand R. Marcos Jr. for signing into law Republic Act No. 12214, known as the Capital Markets Efficiency Promotions Act (CMEPA).

This legislation has introduced a significant reduction in the stock transaction tax (STT), decreasing it from 0.6 percent to 0.1 percent, marking an 83% reduction.

PSE officials have stated that this reform is a long-awaited measure expected to benefit stock market investors by enhancing trading activity and liquidity while increasing the competitiveness of the PSE against other foreign markets.

Before the implementation of CMEPA, the PSE was noted to have one of the highest friction costs within the ASEAN region.

The law also broadens the scope of the STT to encompass various securities listed and traded through local stock exchanges.

This expansion provides clearer guidelines regarding the tax regime applicable to secondary transfers of diverse asset classes, facilitating an environment conducive to the introduction of additional products in the local stock market.

In addition to the STT adjustments, the CMEPA includes provisions aimed at further supporting capital market development.

Notably, it offers a more comprehensive definition of securities, simplifying the tax treatment of a range of financial instruments, potentially accelerating the introduction of new products, such as derivatives.

Furthermore, the law reduces the documentary stamp tax on the original issuance of shares from 1 percent of the par value to 0.75 percent.

This amendment is expected to positively impact companies that engage in issuing new shares, whether through initial public offerings (IPOs) or subsequent equity listings.

Another significant feature of CMEPA is the enhancement of the Personal Equity and Retirement Account (PERA).

The law provides for an additional 50 percent tax deduction on actual contributions made by private employers who match or exceed their employees' contributions to PERA, which is anticipated to stimulate transactional activity in the stock market.

In a statement, the PSE acknowledged the efforts of the Philippine Senate and House of Representatives in passing this bill, extending specific gratitude to Senate President Francis G. Escudero and House Speaker Ferdinand Martin Romualdez.

The PSE also highlighted the contributions of Senate and House Ways and Means Committees, led by Senator Sherwin T. Gatchalian and Representative Joey S. Salceda, respectively, in advocating for the approval of CMEPA.

Additionally, the Exchange recognized the support of Special Assistant to the President for Investment and Economic Affairs Secretary Frederick D. Go and Department of Finance Secretary Ralph G. Recto for prioritizing this transformative capital market reform within the government's economic agenda.