Rep. Ray T. Reyes of AnaKalusugan Party-list is pushing for a measure to boost capital markets and raise the investment competitiveness in the country.
Reyes also defended a bill which seeks to reduce taxes for stock transactions and create equality in the tax treatment of debt and stock securities.
“There is a sense of urgency that we be immediately competitive with other regions, especially our ASEAN neighbors,” Reyes said during plenary deliberations on House Bill No. 9277.
According to the lawmaker, the Philippines is the country with the highest stock transaction tax in the ASEAN 6 while remaining 2nd to the last in market capitalization.
“If we do not do this, we may be overtaken by Vietnam and be the last in the ASEAN 6 in terms of market capitalization,” he added.
The measure seeks to amend the Tax Code by reducing taxes on stock transactions from 0.6 percent to just 0.1 percent of stock value and the tax on dividends of foreign non-residents from 25 percent to 10 percent.
Currently, the transaction tax in Indonesia, Malaysia, and Vietnam is 0.1 percent, Thailand is at 0.11 percent, while Singapore is at 0 percent.
“Its not just a matter of compliance but the matter of urgency to compete. This is an institutionalized measure of the country where it is the best way to compete for foreign investors and local investors so that any transaction in the stock market will be taxed less. This will incentivize them to come into the market,” Reyes said.
“Vietnam is already at 0.1 percent and slowly approaching the Philippines in terms of market capitalization,” he added.
Reyes said several studies showed that reducing transaction tax will create a net positive effect on transaction volume.
He cited the case of Taiwan who reduced their transaction tax from 0.5 percent to 0.25 percent and resulted in a net effect of 6.33x in transaction volume.
“Using the same arithmetic, we can increase our transaction volume more than 6.33x,” he said.
“But more than that, we hope that this measure would encourage our kababayans to learn more about the financial market and have more Filipinos participate in the capital market,” the solon added.