The chair of the House committee on ways and means confirmed on Friday that the Capital Market Efficiency Promotion Act has been enacted into law as Republic Act 12214 following the signature of President Ferdinand Marcos Jr. on May 29, 2025.
“This is a landmark reform. Republic Act No. 12214 will help build a deeper, more inclusive, and more affordable capital market system in the Philippines. But more than anything else, this law helps secure the future of Filipino workers,” the panel’s chair, Albay Rep. Joey Sarte Salceda said.
The law introduces long-overdue structural reforms in financial taxation, including lower transaction taxes, harmonized capital gains and interest tax rules, and better treatment for investment products like mutual funds, unit investment trust funds, and retirement accounts.
According to Salceda, a key highlight of the new law is the expansion of the Personal Equity and Retirement Account or PERA, a long-underutilized retirement savings tool. Under RA 12214, employers can now claim an additional 50 percent tax deduction for PERA contributions, provided they match or exceed the employee’s contribution.
Salceda pushed for the provision during the bicam.
“This is about dignity in aging. We want every Filipino to retire with something of their own. This reform makes that possible,” Salceda said.
Despite being created in 2008, PERA has fewer than 6,000 active accounts as of end-2024, he said.
According to data from the Bangko Sentral ng Pilipinas, Salceda, the House resident economist said total PERA assets amount to only ₱491.4 million. Salceda said this is an extremely small base for a retirement system, representing a tiny fraction of household financial assets.
“This reform changes that. This is my gift to this generation of workers and professionals who will now have bigger corporate pensions than our generation or any generation before. They will retire better.”
Salceda emphasized that the effects of the expanded PERA on retirement security will be felt most profoundly a generation from now, as today’s workers benefit from compounded savings and institutional support.
“But the economy as a whole, especially our financial markets, will begin feeling the impact much sooner. It increases capital formation, long-term saving, and investment depth almost immediately.”
The expanded PERA under RA 12214 will cost about ₱6.7 billion in forgone taxes over 10 years but is projected to recover at least ₱4.8 billion through capital gains taxes, income and VAT from finance jobs and businesses, and reduced future social pension costs.
By 2034, PERA assets could reach ₱140.6 billion with around 1.48 million contributors. This will provide long-term capital to domestic markets and significantly improve retirement security at a minimal net fiscal cost.
Salceda also authored the law increasing the social pension for indigent senior citizens and has led the charge for expanding coverage and institutional support for the elderly.
“PERA is the complement to that work. Public pensions protect the poorest seniors. But private savings through PERA will allow workers to age with dignity and financial independence. One protects from poverty. The other enables comfort and choice.”
Among the most significant features of the law are:
• Reduction of the Stock Transaction Tax from 0.6 percent to 0.1 percent
• Removal of Documentary Stamp Tax on mutual funds and Unit Investment Trust Funds
• Tax exemption of income from redemption of mutual fund and UITF units
• Standardization of final withholding tax on interest income at 20 percent
• Harmonization of capital gains tax to a flat 15 percent on shares of foreign corporations
“These reforms lower costs, simplify compliance, and make it easier for every Filipino to become an investor,” Salceda said.
