A BILL seeking to reduce taxes on stock transactions has the potential to attract more foreign investors into the Philippine stock market, an analyst said.
House tax panel chair Joey Salceda has filed House Bill No. 8958 or the Capital Markets Efficiency Promotion Act, which amends the Tax Code to reduce taxes on stock trades.
The proposed reduction of taxes on stock transactions from 0.6 percent to just 0.1 percent of stock value may not be enough to entice local investors into stocks until interest rates stabilize, said Ed Francisco, president of BDO Capital.
However, the proposed reduction of the tax on dividends of foreign non-residents to 10 percent from 25 percent “might have a bigger impact and actually bring the foreigners back.”
Francisco said the country’s high tax on dividends for foreigners has been a deterrent for them to invest in local equities.
“What Joey Salceda is doing is great. It’s leveling the playing field for the transaction taxes, bringing it lower,” he said.
The Philippine Stock Exchange (PSE) index fell more than 1 percent on Friday, Aug. 25, shedding 65.17 points and settled at 6,160.
The PSE has been slipping since hitting the 9,000-level in January 2018, which was its record high.
Foreign portfolio investments yielded net outflows from January to June of $803 million this year. This is a reversal of the $778 million net inflows noted for the same period last year, according to data from the Bangko Sentral ng Pilipinas. (ABS-CBN News)
