The Department of Finance (DOF) has formally requested the House of Representatives to withdraw the proposed Capital Markets Efficiency Promotion Act (CMEPA), also known as the GROWTH Bill, citing strong government revenues and better-than-expected performance in the first quarter of 2025.

Initially introduced as a fiscal safeguard in times of uncertainty, the bill aimed to provide the government with additional tax tools and buffers in the face of global volatility, elevated interest rates, and potential economic shocks.

But in a letter to House Committee on Ways and Means Chair Joey Salceda dated April 2, Finance Secretary Ralph G. Recto wrote, “With a double-digit growth in tax collection, the government is well on track in meeting its fiscal consolidation goals.”

What Was the GROWTH Bill?

The GROWTH Bill was part of a larger fiscal reform framework aimed at ensuring long-term debt sustainability. It proposed amendments to capital market rules and additional tax measures intended to create fiscal headroom during downturns.

The policy direction aligned with other landmark reforms such as:

• CREATE MORE (Corporate Recovery and Tax Incentives for Enterprises Act)

• Ease of Paying Taxes (EOPT Act)

• Retail Trade Liberalization

• Public-Private Partnership (PPP) Code

Each measure was designed to modernize the tax system, attract investment, and strengthen economic competitiveness.

Proposed Tax Rates Under the GROWTH Bill

Here are the key tax changes that were proposed under the GROWTH Bill (CMEPA):

While ultimately withdrawn, the GROWTH Bill contained specific proposals aimed at standardizing capital taxation:

• A unified 15% tax rate on dividends, interest income, and certain capital gains.

• Reduction of the stock transaction tax on listed shares from 0.6% to 0.5%.

• Introduction of a 0.1% tax on derivatives and complex financial instruments.

The rationale behind these changes was to create a simpler, more efficient, and neutral tax system across different forms of capital investment — while also raising revenue to future-proof the national budget against global uncertainties.

However, critics had expressed concerns that higher taxes on dividends and interest income could discourage investment, particularly in real estate investment trusts (REITs), pooled funds, and small investors relying on passive income.

Why Was It Withdrawn?

The DOF cited better-than-anticipated revenue collections in Q1 2025. This implies both the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) exceeded targets, helping the government stay on track with its Medium-Term Fiscal Framework (MTFF).

Additional supporting factors:

• A projected decline in the country’s debt-to-GDP ratio by end-2025

• Sustained investor confidence amid stable inflation and lower interest rates

• No immediate need for new tax instruments to meet expenditure targets

What This Means for Real Estate, Investors, and Business Leaders

1. Reduced Risk of New Tax Burdens

The withdrawal reduces near-term pressure for new taxes on capital markets or real estate-linked transactions. For property owners, developers, and REIT investors, this means a continuation of the current tax environment.

2. Policy Stability Boosts Investor Confidence

Predictable fiscal policy encourages developers to proceed with expansion plans and may attract more long-term capital into Philippine real estate. Foreign and institutional investors also view tax consistency as a signal of good governance.

3. Existing Reforms Remain the Focus

With the GROWTH Bill shelved, the DOF reaffirmed its commitment to implementing existing reforms — particularly the CREATE MORE and Ease of Paying Taxes Acts. Both affect real estate by streamlining compliance and offering tax incentives for projects that qualify.

What Happens Next?

While CMEPA will no longer proceed in its current form, the DOF confirmed that it will continue to explore non-tax revenue streams to support government programs. These include:

• Enhancing digital tax collection

• Closing compliance gaps

• Improving efficiency through policy modernization

This signals that while new tax burdens are not on the immediate horizon, the push for fiscal resilience is ongoing.

Conclusion

The withdrawal of the GROWTH Bill reflects the DOF’s confidence in the country’s fiscal trajectory and economic recovery.

For the real estate sector, this provides short-term policy stability, improves investor sentiment, and removes immediate concerns of capital market-related tax expansion.

But with government revenue needs still evolving, developers, property investors, and business leaders should remain vigilant as the administration explores other financing strategies.

For more updates on government policy, market insights, and how fiscal trends affect Philippine real estate, visit BuySellLease.ph.

Official Source: Department of Finance Letter to HOR, dated April 2, 2025