Bill Cutting Stock Transaction Tax Will Also Lower Tax on Lotteries

MANILA, Philippines (September 14, 2023) — According to local media reports the proposed amendments to the Capital Markets Efficiency Promotion Act aims to lower taxes on lottery winnings and documentary stamp tax on horse racing bets while also reducing the stock transaction tax. Here is a summary of the key points of the proposed amendments:

1. Lower Taxes on Lottery Winnings:
   • The proposed amendments seek to reduce taxes on lottery winnings above P10,000 awarded by the Philippine Charity Sweepstakes Office (PCSO) and lotto winnings.
   • The tax rate on winnings above P10,000 would be lowered from the current 20% to 10%.
   • Winnings below P10,000 would be exempt from taxation.
2. Reduction of Documentary Stamp Tax (DST):
   • The DST on PCSO lottery tickets and horse racing bets would be reduced from 20% to 10%.
3. Reduction in Stock Transaction Tax:
   • The stock transaction tax is set to be lowered from the current 0.6% to 0.1%. This reduction is aimed at making the Philippine stock market more competitive.
4. Tax on Dividends for Non-Resident Investors:
   • The bill also includes a provision to reduce the tax rate on dividends for non-resident investors from 25% to 10%.
5. Expansion of Definition of ‘Shares of Stock’:
   • The bill expands the definition of ‘shares of stock’ to include various financial instruments such as warrants, options to buy and sell shares of stock (excluding employee stock option plans), derivatives, and transactions representing short selling of securities.
6. Elimination of Debt Transaction Tax:
   • The proposed measure would eliminate the debt transaction tax, which was included in an earlier version of the bill.
7. Market Competitiveness:
   • The amendments are aimed at enhancing the competitiveness of the Philippines in the region, particularly in comparison to neighboring countries like Vietnam and Indonesia, which impose lower stock transaction taxes.
8. Impact on the Universal Health Care Program:
   • The reduced taxes on lottery winnings and PCSO tickets are intended to help raise funds for the Universal Health Care Program and other priority health programs of the National Government.

It’s important to note that these proposed amendments are subject to legislative approval and may undergo further changes during the legislative process. If signed into law, these changes would have implications for individuals, investors, and the revenue generated by the mentioned activities.

SOURCE: LI Contributor.