Philippine Bill Introduced To Give Stock Market Tax Breaks

by Mary Swire, Tax-News.com, Hong Kong

27 January 2010

The Philippine Stock Exchange (PSE) has welcomed a bill that has been introduced in the Philippines’ parliament to provide greater tax incentives for companies listing on the local stock market.

Such a bill has been the subject of a long campaign by the PSE, who believe that introducing such incentives in the Philippines would boost stock market activity, and thereby stop the decline of its market capitalization and number of listed companies in comparison with other Asian stock exchanges.

The bill proposes a 5% reduction in the rate of corporate income tax from the usual 30% to 25% for 10 years for companies listing their shares on the PSE within a five-year period after the bill is enacted. In addition, the initial public offering tax would be waived.

The bill would also lower the cost of trading on the stock exchange by halving the stock transaction tax from 0.5% to 0.25%. It is hoped that this will not only encourage foreign investment, but also entice additional domestic investors into trying stock market investment.

There will, however, be no time to discuss the bill, which has been called the Stock Market Competitiveness Act (SMARTCA), before parliament goes into recess until after the general elections in May this year. Its proponents hope to re-present it when parliament returns in June.

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