Important Advisory: What the Capital Markets Efficiency and Promotion Act means for your Checking, Savings, and Time Deposit Accounts with RCBC

What is CMEPA?

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?

Currency Term Account Opening Date FWT Rate
Philippine Pesos Less than five (5) years Before July 1, 2025 20%
Philippine Pesos Less than five (5) years July 1, 2025 onwards 20%
Philippine Pesos Equal to or greater than five (5) years Before July 1, 2025 Until maturity date, you will continue to enjoy the tax rate that was applied during account opening date
Philippine Pesos Equal to or greater than five (5) years July 1, 2025 onwards

20%
USD or Third Currencies  Regardless of term Before July 1, 2025 Until maturity date, you will continue to enjoy the tax rate that was applied during account opening date
USD or Third Currencies  Regardless of term July 1, 2025 onwards 20%

 

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.