Bill reducing stock transaction tax approved by House plenary

THE House of Representatives approved on Wednesday a bill seeking to reduce the tax on stock transactions to 0.1% from 0.6% currently.

Legislators during the plenary session approved House Bill No. 9277, or the proposed Capital Markets Efficiency Promotion Act, through voice vote.

Reducing the tax on stock transaction is expected to improve the competitiveness of the Philippine stock market within the Association of Southeast Asian Nations (ASEAN), according to bill sponsor and Party-list Rep. Ray T. Reyes.

“If we look at the cost of capital in Philippines and also in our taxes on capital markets, we are the ones with the highest stock transaction tax,” he said during interpellation on Tuesday.

Mr. Reyes said that the Philippines is the second to the last in the ASEAN-6 in terms of market capitalization, and is at risk of being overtaken by Vietnam.

Indonesia, Malaysia, and Vietnam have a 0.1% tax on stock transactions, while Thailand imposes a 0.11% tax.

He estimates foregone revenue at P2.5 billion once the measure passes into law.

On Wednesday, the plenary approved an amendment by Cagayan De Oro Rep. Rufus B. Rodriguez proposing documentary stamp tax (DST) exemptions for insurance policies covering property damage inflicted by natural disasters if the insurance cover is below P100,000.

A P20 DST would apply for insurance cover of up to P300,000, and a P150 DST would be imposed on coverage of up to P1 million.

The proposed law also seeks to lower the dividends tax rate for non-resident investors to 10% from the current 25%, as well as remove the 7% gross receipts tax on net trading gains by banks and financial institutions. —