The Philippine House Committee on Ways and Means has included amendments to a proposed Capital Markets Efficiency Promotion Act. The regulations now also aim to lower taxes on lottery winnings and documentary stamp tax on horse racing bets while also reducing the stock transaction tax.
The tax reductions will affect only winnings above P10,000 ($177) awarded by the Philippine Charity Sweepstakes Office (PCSO). This will also include a reduction of tax on lotto winnings, to 10% from the current 20%. Winnings below P10,000 will be exempt. Additionally, the Documentary Stamp Tax (DST) on PCSO lottery tickets and horse race bets will also be reduced to 10% from the current 20%.
"The reasonable rates of taxes on lottery winnings and on PCSO tickets will help raise funds for the Universal Health Care Program under Republic Act No. 11223 and other priority health programs of the National Government," Committee Chairman and Albay Representative Jose Ma. Clemente “Joey” Sarte Salceda told the panel, as per Business World.
The Capital Markets Efficiency Promotion bill was approved by the committee on September 6th. The measure seeks to lower the stock transaction tax to 0.1% from the current 0.6%. It also aims to reduce the tax on dividends for non-resident investors to 10% from the current 25%. Salceda said the provision will help enhance the Philippines’ competitiveness with its neighbors.
The Securities and Exchange Commission is tasked by the bill to draft rules governing the market for short sales. If signed into law, the measure will also eliminate the debt transaction tax, which featured in an earlier version of the bill. Salceda has said that the Philippines’ 0.6% stock transaction tax is the highest within the Association of Southeast Asian Nations.
Salceda, during a committee meeting last week, had noted that Vietnam and Indonesia only impose 0.1% while other neighboring countries exempt the sale of shares of stock (from tax).
“This keeps the Philippine bond and equity markets small relative to our regional peers,” he said. He further noted that The Philippine Stock Exchange has 283 listed companies, while other stock exchanges in the region have between 425 and 963.
He said: “We expanded the definition of ‘shares of stock’ to include warrants, options to buy and sell shares of stock excluding employee stock option plans, other types of derivatives, and transactions representing short selling of securities. This amendment serves to address the uncertainty in the tax treatment of secondary transfer or sale through a stock exchange.”