What CMEPA means for your Checking, Savings, and Time Deposit Accounts with RCBC

What is CMEPA?

Capital Markets Efficiency and Promotion Act (CMEPA) or Republic Act No. 12214 seeks to enhance the competitiveness of the Philippine capital markets by simplifying the taxation of passive income and reinforcing fiscal stability by amending multiple sections of the National Internal Revenue Code of 1997 (NIRC), as amended.  CMEPA was signed into law on May 29, 2025 and takes effect on July 1, 2025.

How does CMEPA affect the Checking and/ or Savings Accounts (CASA) I am maintaining with RCBC?

If your CASA is denominated in Philippine currency, there is no change on the Final Withholding Tax (FWT) rate on the interest you earn from said accounts.  The FWT remains at twenty percent (20%).

However, if your CASA is denominated in US Dollar (USD) and/ or Third Currencies, the FWT on the interest you earn from said accounts will now be increased from fifteen percent (15%) to twenty percent (20%).  

With this, CMEPA aims to impose an equal tax treatment across all deposits.

For my Checking and/ or Savings Accounts denominated in USD and/ or Third Currencies, when can I expect the twenty percent (20%) FWT to take effect?

Interest on Savings accounts are credited to your account on a quarterly basis.  Thus, starting July 1, 2025, the FWT of 20% will take effect on quarter-end.

How does CMEPA affect the Time Deposits (TDs) I have with RCBC?

Please note that if you have a valid and existing Tax Exemption Ruling (TER) or Certificate of Tax Exemption (CTE) issued by the Bureau of Internal Revenue (BIR), you will continue to enjoy the exemption from FWT.  Interest income will not be subject to FWT.

Will my TD, denominated in Philippine Pesos, be subject to Documentary Stamp Tax (DST)?

Yes.  If you did not pre-terminate your TD, then the DST will be shouldered by RCBC.  However, the DST will be shouldered by the accountholder if the TD was pre-terminated.

If I am a Non-Resident Alien Engaged in Trade and Business (NRAETDB) in the Philippines, will my transactions in USD and/ or Third Currencies be subject to income tax?

The income of NRAETB from transactions denominated in US Dollar and/ or Third Currencies shall continue to be exempt from the relevant income taxes.

Additional FAQs

Is there a new tax on savings accounts?

No, there is no new tax on your savings account. The 20% tax being discussed refers to the tax on interest earnings, which has been in place since 1998. Your total savings or principal remains unaffected.

What changes does CMEPA introduce?

The Capital Markets Efficiency Promotion Act aims to make the taxation of various financial products more consistent and transparent. As part of this, some Final Withholding Tax (FWT) rates will be adjusted beginning July 1, 2025.

Which accounts are affected by the updated tax rates?

The following accounts are affected by the updated tax rates:
Foreign Currency Deposit Unit (FCDU) accounts: FWT will increase from 15% to 20%
Long-Term Time Deposits in Philippine Pesos: Previously exempt, now subject to 20% FWT

Will this impact how much I earn from my deposits?

For the affected accounts, yes—there will be a reduction in net interest earned due to the higher tax. However, for regular peso savings and checking accounts, the 20% tax on interest remains unchanged and is not a new development.

How does this law benefit depositors like me?

CMEPA promotes a more level playing field across different financial instruments. By clarifying and standardizing tax treatment, it supports a more transparent and efficient financial system—helping clients make better-informed decisions.