CMEPA tax rules not applicable to SSS, GSIS, Pag-IBIG savings — DoF

THE Department of Finance (DoF) said government-backed savings schemes are exempt from the tax provisions of the new Capital Markets Efficiency Promotion Act (CMEPA).

“The unified rate does not apply to provident savings programs under the Social Security System (SSS), Government Service Insurance System (GSIS), and Pag-IBIG (such as MP2). These savings programs remain exempt from tax,” the DoF said in a statement on Thursday.

The DoF was responding to a backlash against CMEPA, amid claims that its tax provisions apply to funds held in government savings schemes, which it called “fake news.”

“The standardized tax rate is not retroactive and does not apply to financial instruments that were issued or transacted prior to July 1, 2025. Therefore, existing long-term deposits made prior to the effectivity of the law will continue to enjoy the preferential rate until their maturity,” it added. 

CMEPA, which sets a flat 20% tax rate on interest income, is not a new levy but rather “corrects an unfair system that favored the wealthy,” it said.

The DoF also noted that before the law was signed, the National Internal Revenue Code of 1997 had imposed a 20% final tax on interest earned from bank deposits with a maturity of less than three years.

The rate for deposits with maturities of between four years and under five years was 5%, and those with maturities of between three years and under 4 years had been 12%.

“This special tax treatment favored depositors who can afford to park their savings in long-term deposits, making the tax system unfair for short-term depositors who face liquidity issues and need immediate access to their funds,” it said.

Citing the Bangko Sentral ng Pilipinas, the DoF said more than 99.6% of total deposits are already subject to the 20% tax rate, with only 0.4% enjoying preferential rates.

President Ferdinand R. Marcos, Jr. signed CMEPA into law on May 29. — Aubrey Rose A. Inosante