Senator Win Gatchalian has filed a bill that seeks to align the Philippines’ capital markets with its ASEAN neighbors in terms of attracting investors, enhancing market development, and fostering growth.
Gatchalian filed Senate Bill 2865 or Capital Markets Efficiency Promotion Act which, once enacted into law, would put the country’s tax rates on income generated from capital investments more closely with other countries in ASEAN.
“Investing in the Philippines is more expensive vis-a-vis our neighboring countries. We hope that the enactment of this proposed measure would enable our country to catch up and encourage more Filipinos to invest in our capital markets,” Gatchalian said.
“Malaki ang papel ng sektor ng pananalapi sa pangmatagalang paglago ng ekonomiya. Inaasahan natin na sa pagsasabatas ng panukalang ito ay magiging mas malakas ang sektor na ito at makakahikayat ng mas maraming Pilipino na mamuhunan,” he added.
He cited the Asian Development Bank’s Key Indicator Database in 2023, which showed that the value of the country’s stock market relative to the size of the economy stood at 54.1%, significantly lower than the average 78.3% among other Southeast Asian economies.
This is caused in part by the country’s imposition of a stock transaction tax (STT) of 0.6% on the value of the transaction, currently the highest in the region, he said. Other Southeast Asian countries such as Malaysia, Singapore, Thailand, Myanmar, and Cambodia do not impose any STT while Indonesia and Vietnam only impose an STT of 0.1%, the senator noted.
He said the Philippine Stock Exchange made a forecast that the proposed reduction in STT to 0.1% would lead to an aggregate value of stocks traded to P4.9 trillion in fiscal year 2029, which will be 3.79 times greater than the value of stocks traded in fiscal year 2023.
Gatchalian said another contributing factor to the friction costs is the imposition of documentary stamp taxes (DST), which under the proposed measure would be reduced from 1% to 0.75% of the par value of the shares of stocks.
“These friction costs create a barrier for Filipinos to engage in our markets, as they make investing costly and far-reaching,” he said.
