Jonathan Frederic De Santos

People line up outside the Landbak office in Tacloban City after its ATM opened for the first time after Typhoon Yolanda hit the area.

Article (news)

Benise Balaoing

Andrea Taguines

ABS-CBN News

<p><strong>(UPDATED)</strong> Filipinos on social media have been sent into a collective panic of sorts following the spread of misleading posts about the Capital Markets Efficiency Promotion Act (CMEPA) which took effect on July 1, 2025.</p><p>One recurring message is that your bank savings, or the money you have deposited to the bank, in its entirety, are now being taxed by 20 percent.</p><p>Out of fear, some netizens have said they are considering pulling out their money from the bank and transferring it somewhere else.</p><p>But the Department of Finance (DOF) has branded this as &quot;fake news&quot;.</p><p>“Naging isyu ‘to dahil medyo may paglinlang din doon sa mga meme na lumalabas sa social media. Maraming umiisip na bubuwisan natin yung buong deposito ng mga kababayan (natin). Walang ganun,” said DOF Secretary Ralph Recto on DZMM’s Isyu Spotted on Thursday.</p><div><strong>WHAT GETS TAXED?</strong></div><p>Recto clarified that only the interest earned from short-term deposits, such as checking and savings accounts, and not the entire amount of your money in the bank gets taxed. </p><p>And this system has been in place for decades, in accordance with the Tax Reform Act of 1997.</p><p>“1998, may buwis na ang lahat ng passive income katulad ng interest income sa bangko so hindi na ‘to bago. Hindi naman kami ang gumawa nyan, noong araw pa meron na yan,” he said.</p><div><a href="https://www.abs-cbn.com/news/business/2025/7/15/thrift-banks-prepare-to-go-hybrid-see-possible-double-digit-growth-2246"><strong>Thrift banks prepare to go hybrid, see possible double digit growth</strong></a></div><div><strong>‘IT CORRECTS AN UNFAIR SYSTEM’</strong></div><p>But in an effort to level the playing field for all Filipinos, the tax on interest income from long-term time deposits, or those parked in the bank for over five years, has also been set at 20 percent.</p><p>Before CMEPA, time deposits of more than five years were exempt from interest income tax, which the DOF and some tax experts say favor the wealthy minority.</p><p>“In fact, estimates using Bangko Sentral ng Pilipinas (BSP) data show that more than 99.6% of total deposits were already subject to the 20% tax rate, while only 0.4% enjoyed preferential rates,&quot; said the DOF in a separate statement.</p><p>Tax lawyer Benedicta Du-Baladad agrees with this.</p><p>“Yung mga lower income, they have barely enough money to put in the bank… Yet if they put their money in the bank in less than five years, taxed sila ng 20 percent. But those who can afford to keep their money for five years in the bank, exempted, walang tax yung kanila,” she said.</p><p>Though existing long-term time deposits are not affected by the law— only those opened on July 1, 2025 and onwards.</p><div><strong>INVESTING IN CAPITAL MARKETS</strong></div><p>The measure is also seen as a way to encourage Filipinos to put their money in capital markets since it removes documentary stamp taxes on collective investment schemes, and reduces the stock transaction tax rate.</p><p>“Kunyari P10,000 worth yung bibilhin na shares (sa stock market), dati icha-charge ka ng 0.6 percent o P60. Ngayon, 0.1% na lang o P10… para yung pinaghirapan nating pera, mas malaki yung kita,” said Bank Marketing Association of the Philippines Director Mike Villa-real.</p><p>Philippine Stock Exchange President and CEO Ramon Monzon noted that it would also help attract more foreign investors.</p><p>“Kasi we’re competing with other exchanges for the foreign funds. With our 0.6 percent stock transaction tax, we’re the only exchange in the region that imposes that so when investors trade here, their cost (was) much higher (before),” he said.</p><p>But Villareal said Filipinos should still be smart about investing.</p><p>“Ang tanong dito is kung meron ka bang savings? If that is true for you, determine kung ano ka ba— low-risk, medium-risk or high-risk na investor? Ang best talaga is mixed. Meron kang deposit, meron kang government securities, meron kang stock market,” he added.</p><div><strong>IS THIS REALISTIC FOR ORDINARY FILIPINOS?</strong></div><p>The problem is, for economic think tank IBON Foundation, most Filipinos don’t even have enough savings to invest in capital markets like the Philippine Stock Exchange (PSE).</p><p>“The BSP itself reported that 20.1 million or three out of four Filipino families didn&#x27;t have any savings as of the end of 2024. This brute fact should put into context any hype that the new law empowers ordinary Filipinos,” said IBON Foundation Executive Director Sonny Africa.</p><p>Africa believes the government should focus on securing decent wages, pensions and social protections for Filipinos “instead of pushing them to be investors in volatile capital markets and shifting risk to individuals.”</p><div><strong>BETTER THAN E-GAMBLING</strong></div><p>For Monzon, Filipinos are better off learning the ropes of the stock market than continue the obsession over online gambling games.</p><p>“The bigger challenge now really is a lot of small investor or retail investors or less privileged people— all their hard-earned money is being wasted on online gambling instead of being channeled to more productive investments,” he said.</p><p>Recto offered the same advice.</p><p>“Mag-invest na lang sila kaysa magsugal. Magkano ba ang stocks ngayon? May mga presyo dyan na isandaang piso lang may stock ka na rin,” he said.</p><div><strong>IMPACT ON BANKING INDUSTRY</strong></div><p>But how does this affect the banking industry? Some analysts say they are pushed to become more competitive.</p><p>“With that tax impact, the issuers will also probably have to rethink. What premium will you give to investors so that they will still be incentivized to invest on 5-year or long-term deposits?” said Ritchie Teo, the Chief Investment Officer of Sun Life Investment Management and Trust Corporation.</p><p>Du-Baladad also said that this is the positive impact she expects from CMEPA.</p><p>“Ang mangyayari nyan, yung mga bangko, yung mga investee corporations, pataasan nyan ngayon ng sinong makakapagbigay ng highest interest o highest return ng money,” she said.</p><p>There are concerns that it may raise borrowing costs, but some banks believe they can take on the burden.</p><p>“I think the BSP will also cut rates by 50 basis points in the coming months so it would even out so for us. I think we can absorb it, we don’t have to raise our interest rates to our customers,” said Group CEO of Asialink Group of Companies Robert Jordan Jr., in an interview on ANC’s Market Edge.</p><div><strong>MORE GOVERNMENT REVENUES?</strong></div><p>President Ferdinand Marcos Jr. earlier said that the “CMEPA is projected to generate over P25 billion in net revenue” in five years.</p><p>While Recto says it’s a revenue neutral measure, Du-Baladad said that’s only the initial expectation.</p><p>“With the leveling of the playing field and with the expectation that there will be more volumes that would come in, more efficient na siya, wala nang leakages, etc., I would suppose it would create additional revenue,” she said.</p><div><br/></div><div><strong>RELATED VIDEO</strong></div><div><span class="fr-video fr-deletable fr-fvc fr-dvb fr-draggable" contenteditable="false" draggable="true"><iframe width="640" height="360" src="https://www.youtube.com/embed/6UTOTIjEqS0?&amp;wmode=opaque&amp;rel=0" frameBorder="0" allowfullscreen="" class="fr-draggable"></iframe></span><br/></div>

<p>The new Capital Markets Efficiency Promotions Act (CMEPA) does not impose new taxes, the Department of Finance said Thursday, adding it standardizes the tax rate on interest income "to correct an unfair system that favored the wealthy."</p>

The new Capital Markets Efficiency Promotions Act (CMEPA) does not impose new taxes, the Department of Finance said Thursday, adding it standardizes the tax rate on interest income "to correct an unfair system that favored the wealthy."

20% tax on bank savings? DOF, experts debunk CMEPA misinterpretations

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20% tax on bank savings? DOF, experts debunk CMEPA misinterpretations

Benise Balaoing,

Andrea Taguines,

ABS-CBN News

Published July 17, 2025 05:53 PM PHT

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Updated July 18, 2025 07:20 PM PHT

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