Philippine Stock Exchange (PSE) will implement a lower stock trading tax (STT) starting July 1 from July 1fPromotional Act (CMEPA).
“The publication of CMEPA will be completed by July 1st Starting on July 1,” PSE President and CEOfiCER Ramon S. Monzon said in a file uploaded to the market operator’s website on June 11.
Under Article 29 of CMEPA, the law will come into effect on July 1 Official Bulletin Or at least one General circulation newspapers.
CMEPA reduces the stock trading tax to 0.1% (1% of 1%), from 0.6% (1% of 1% of the total selling price or the total value of the stock that is sold, exchanged or disposed of.
Cristina S. Ulang, head of research at First Metro Investment Corp., said in a message from Viber that a lower stock trading tax could help the market grow.
“This reduces the so-called friction costs of stock trading, which makes investments more effective and inspiring and helps improve the conversion of market value,” she said.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message that the implementation of CMEPA will help promote equity market participation among local and foreign investors.
“The law will help attract more large foreign and local investors, with lower stock transaction costs compared to other ASEAN (Southeast Asian Nations Association) and Asian stock markets,” he said. “This is part of making our market more cost-competitive for trading.”
Juan Paolo E, Managing Director of Bank of China Capital Corporation.
“The lower friction costs will benefit all investors in all listed stocks, but perhaps more for traders who often bet on short-term price movements,” he said.
“We expect a significant reduction in STT to increase trading activity and tighten the bid spread,” he added.
In a statement last week, PSE said Stt’s reduction is expected to improve trading activity and liquidity in the stock market, as well as the competitiveness of local markets for other foreign markets.
PSE said that before the CMEPA was enacted, local exchanges were one of the highest friction costs in the ASEAN region.
“CMEPA also extends the application of STT to the application of other securities listed and traded through local stock exchanges that can be determined to apply to tax regimes that apply to secondary transfers, asset classes besides stocks, and promote more products on the local stock market,” it said.
“Reducing STT from 0.6% immediately to 0.1% is a long-awaited reform that will benefit stock market investors.”
Some other CMEPA regulations include reducing the original stock’s documentary stamp tax from 1% to 0.75%, and allowing employers to require additional deductions for additional 50% tax on personal interests and retirement account contributions, provided they match or exceed employees’ contributions.
On Wednesday, the major PSE index rose 0.53% or 33.65 points to 6,381.32, while the broad all-stock index rose 0.47% or 17.69 points to 3,776.19.
On Independence Day, there are no trades in the Philippines stock market. – Revin Mikhael D. Ochave
