Philippine Finance, Taxation, and the Stock Market

As of 2026-08-30 · Updated 2026-08-30 · Section: Economy, Industry & Business · 日本語版

Philippine finance and taxation flipped, in 2026, from the "low inflation, rate cuts, and major tax reform" pattern of 2024–2025 into a new phase of "renewed inflation, rate hikes, and slowing growth." When citing figures, you must always check exactly which year and month they refer to — otherwise you can end up with the opposite conclusion. What follows centers on the situation as of August 2026.

1. The central bank (BSP) and monetary policy

1-1 The BSP's role

Bangko Sentral ng Pilipinas (BSP) was established under the 1993 New Central Bank Act. Its primary mandate is price stability, and it is responsible for ① monetary policy, ② supervision of BSP-Supervised Financial Institutions (BSFIs) such as banks and e-money issuers, ③ operation of the payments system, ④ management of foreign reserves, and ⑤ currency issuance. Its top decision-making body is the Monetary Board, and its Governor is Eli M. Remolona, Jr. Its policy rate is the overnight reverse repurchase rate (RRP, the Target RRP Rate).

1-2 Policy rate trajectory (2025–2026)

The biggest turning point of 2026 is the reversal from "cutting" to "hiking." In BusinessWorld's August 2026 survey, 19 of 24 respondents, and in the Philippine STAR's survey, 9 of 13, expect a 25bp hike (to 5.00%) on 27 August. A move to 5.00% would be the highest level since June 2025 (5.25%). The remaining 2026 meetings fall on 22 October and 17 December.

注 Anything written in 2025 describing the Philippines as being in a "rate-cutting phase" no longer applies in 2026. Because a February rate-cut article and a June rate-hike article can turn up side by side in the same search results, always check the date.

1-3 Reserve requirement ratio (RRR)

A major reduction was announced on 21 February 2025, taking effect from 28 March 2025, bringing the ratio to the following levels.

The ratio stood at 20% as recently as 2018. Governor Remolona has stated a goal of bringing the RRR to zero during his term (through 2029), and some securities firms expect a further 200bp cut (to 3%) within 2026. A notable feature is that RRR cuts are explained as a "structural, not cyclical" measure — distinct from interest-rate management.

1-4 Inflation, exchange rate, and growth (as of August 2026)

The main driver of the renewed inflation is rising crude oil prices tied to the situation in the Middle East (Iran), and the peso weakness linked to it.

注 (Corrected in a 2026-08-25 cross-check. Sources: the "Electricity and Power Bills" article, §4, dated timeline; "Semiconductor and Electronic Components Industry," §8-1; "Automotive Industry and EVs," §7) The old draft's "the clash (April 2026)" is one to two months off. The other three resources consistently describe a timeline of the Strait of Hormuz becoming clogged in late February 2026 → crude oil reaching roughly $115/barrel by mid-March (versus $72 before the war) → Executive Order No. 110 (EO 110) declaring a national energy emergency on 24 March, and the signing date of EO 110 (24 March 2026) is the fixed reference point. What happened in April was not "the outbreak of the clash" but rather "the peak of the inflation rate (7.2%)." Do not conflate the two. The Philippines imports nearly all of its oil, leaving it extremely exposed to crude prices. In Q2, fixed investment fell 13.7% (the sharpest drop in over five years), reflecting a slowdown in public investment caused by the flood-control corruption scandal.

Credit ratings remain investment grade, but outlooks were downgraded across the board in April 2026.

The backdrop is fiscal. Government debt reached ₱17.71 trillion, or 63.2% of GDP, in 2025 — its highest level in 20 years. Fitch estimates the 2026 interest-payments-to-revenue ratio at 13%, versus a BBB-rated median of 9%.

2. The banking system

2-1 License categories and number of institutions

Total assets of the banking system reached ₱29.86 trillion (2025, an all-time high), of which UBs and KBs alone accounted for ₱25.93 trillion as of end-June 2025 (up 6.5% year-on-year) — the overwhelming majority. The non-performing loan (NPL) ratio stood at a stable 3.3% (September 2025). The nationwide bank branch network exceeded 13,500 (November 2025, BSP).

From more than 1,000 banks in the late 1990s, the number has fallen to roughly 500 through M&A. Since 2012 alone, there have been over 100 mergers among rural and thrift banks. Under measures such as RA 11901 (2022), rural banks can now be 100% foreign-owned.

2-2 Major banks (by total assets, per BSP disclosure, end-June 2025)

注 Rankings shift depending on the reference point (standalone vs. consolidated, and by quarter). Some reporting suggests Metrobank moved up the rankings from Q4 2025 onward, so check the reference date of any source before citing "who is #2." BPI, founded in 1851, is among the oldest banks in Southeast Asia. A merger between Landbank and DBP has repeatedly been floated but had not materialized as of 2026.

2-3 Deposit insurance (PDIC)

The Philippine Deposit Insurance Corporation (PDIC) is a government agency established under Republic Act No. 3591.

From 15 March 2025, the deposit insurance ceiling (Maximum Deposit Insurance Coverage, MDIC) doubled from ₱500,000 to ₱1,000,000 per depositor per bank. The basis is PDIC Memorandum 2025-01. The adjustment takes inflation and the ratio to per-capita GDP into account, and will be reviewed every three years going forward. Premium rates are unchanged, so there is no additional cost to depositors.

注 The new ₱1,000,000 ceiling applies only to banks placed under a closure order on or after 15 March 2025 (it is not retroactive). Banks that failed before that date remain capped at ₱500,000. 注 Mutual funds, UITFs, bonds, and stocks are not covered by PDIC, even when sold over a bank counter. Peso and foreign-currency deposits, calculated separately per joint account holder, are covered.

2-4 Digital banks

Six licenses are currently held: Overseas Filipino Bank (OFBank, a Landbank subsidiary), Tonik Digital Bank, UNObank, UnionDigital Bank, GoTyme Bank, and Maya Bank. All are BSP-licensed and covered by PDIC's ₱1,000,000 protection.

• The BSP lifted its three-year moratorium in January 2025, opening up four additional slots (a market-wide cap of 10 banks)
• By the December 2025 deadline, three companies applied. Parallel review is proceeding under BSP Memorandum M-2025-032
• As of July 2026, none of the three had been granted a license. Deputy Governor Javier has said the review does not end at the BSP and also requires meeting SEC-related documentary and corporate requirements, and has left open the possibility of a Monetary Board decision within the year. Applicant names have not been disclosed
• The six digital banks had a combined customer base of 20.4 million as of early 2026

In February 2025, the Philippines exited the FATF (Financial Action Task Force) grey list. The FATF plans a follow-up review in 2027.

注 The Bank Secrecy Law (RA 1405; RA 6426 for foreign-currency deposits) has not yet been amended. Bills that would let the BSP examine deposits suspected of being linked to wrongdoing (House Bills No. 7 and 6707, Senate Bill 1047, and others) are under deliberation in the 20th Congress but had not passed as of August 2026. The IMF has also recommended amendment to strengthen AML/CFT effectiveness.

3. The stock market

3-1 The Philippine Stock Exchange (PSE)

The Philippine Stock Exchange, Inc. (PSE) was formed in 1992 through the merger of the Manila Stock Exchange and the Makati Stock Exchange (its origins trace back to 1927), and it is the country's sole exchange. It is itself listed (ticker: PSE). Its disclosure portal is PSE EDGE, and its President and CEO is Ramon S. Monzon.

3-2 The PSEi Index

• Composed of 30 stocks, using free-float-adjusted, market-capitalization weighting. The PSE's published base value is 2,922.21 (30 September 1994)
• Selection criteria: market capitalization, liquidity, free-float ratio, and financial requirements. There is also an early inclusion mechanism (introduced in 2021) for stocks that surge shortly after their IPO
• Reviewed twice a year. The index family includes the PSEi, the All Shares index, six sector indices (Financials, Industrial, Holding Firms, Property, Services, Mining and Oil), the MidCap index, and the Dividend Yield index

The rebalancing effective 3 August 2026 - Added: Maynilad Water Services (MYNLD) — after its share price rose roughly 49% post-IPO, reaching 22nd place by market cap overall. This is the third stock to use the early-inclusion route since the mechanism was introduced - Removed: Converge ICT (CNVRG) — fell to last place among constituents and moved to the MidCap index - Aboitiz Equity Ventures (AEV) was added to the Dividend Yield index to fill the slot vacated by RRHI's delisting

Starting with the next review (covering January–December 2026), a new methodology that weights liquidity over market capitalization will apply. This is being described as "the biggest overhaul of the index methodology in 15 years."

3-3 Market size and the 2026 market

Foreign investors have now been net sellers for three consecutive years. The PSE itself attributes the 2025 decline to ① the flood-control corruption scandal, ② peso weakness, and ③ the third-quarter GDP slowdown. As of August 2026, the market's P/E ratio sits at roughly 8x — cheap even by ASEAN standards.

注 The SEC chairperson's 2025 claim that "₱1.7 trillion in market capitalization was lost to corruption" was apologized for and retracted by that same person in October 2025 after it emerged the supporting documentation did not actually exist. The actual decline from 11–29 August 2025 is put at roughly ₱186 billion. Do not cite the ₱1.7 trillion figure.

3-4 IPO activity — GCash and Maya

The PSE is targeting roughly 4 IPOs, raising a combined ₱170–175 billion, in 2026 (per CEO Monzon). In 2025, it had targeted 6 IPOs but achieved only 2 (Top Line Business Development in April, and Maynilad in November).

Maynilad Water Services (listed November 2025) - Offer price of ₱15 per share (cut from an initial reference price of ₱20), raising ₱34.3 billion. The largest deal since Monde Nissin in 2021 - Priced following consultation with the IFC and ADB, implying an enterprise value of roughly ₱113 billion. Allocation: 53.6% Asia, 29.6% domestic, 14.7% Europe, 1% United States

Mynt (operator of GCash) — heading toward the country's largest-ever IPO

Mynt is a joint venture of Globe Telecom, Ayala Corp., and Ant Group (the Alipay affiliate). GCash's monthly active users reached 40.4 million as of end-March 2026 (roughly 55% of the adult population, four times the runner-up), and its 2025 gross transaction value (GTV) was ₱17.0 trillion. It has 2.1 million QR Ph merchant acceptance points and 1.3 million cash-in/cash-out locations.

注 A ₱10 price implies a 2026 forecast P/E of roughly 20x, which some note is higher than the 14–15x typical of overseas peers (Aletheia Capital). Given the shallow liquidity of the Philippine market, the final price remains undetermined. In H1 2026, the Philippines' primary equity market saw only 4 deals worth a combined US$227 million, with zero IPOs.

Maya (Maya Innovations Holdings, formerly Voyager Innovations) - Plans a "dual listing" — a US listing first, followed later by a PSE listing (per Chairman Pangilinan). Reportedly sized at up to US$1 billion, which would make it a landmark deal for a Southeast Asian fintech if realized - Shareholders include PLDT and First Pacific (roughly 39.6% combined), KKR, Tencent, and the IFC. PLDT is seeking preemptive rights to maintain its stake - Maya Bank turned profitable in 2025 (net income of ₱1.6 billion for January–September). As of end-September 2025, it had loans of ₱27.0 billion (+59%), deposits of ₱56.7 billion (+44%), and a net interest margin of 18.9% - 注 In March 2026, the PSE said the listing was "on track," but the third-quarter timeline remains fluid given market deterioration tied to the Middle East situation

4. Taxation

4-1 The past decade's reform packages

4-2 Corporate income tax

注 "CREATE MORE brought corporate tax down to 20%" is incorrect. The 20% rate applies only to the registered-activity income of (a) small domestic corporations and (b) enterprises registered with an Investment Promotion Agency (IPA) that opt into the EDR. Ordinary corporations remain at 25%. The small-corporation bracket must pass both the "income" and "total assets" tests every year — falling outside either for even a single year reverts the rate to 25% (BIR RR 7-2025).

The 20% level is explained as being designed with an eye on the OECD's Global Minimum Tax (Pillar Two, 15%). For export-oriented enterprises, options include a 4–7 year income tax holiday (ITH) plus 20 years of SCIT/EDR, or up to 24–27 years of SCIT/EDR combined. Excess MCIT can be carried forward and credited for three years.

4-3 Personal income tax (effective 1 January 2023, unchanged for 2026)

• Taxable income is not the gross figure — it is the amount after deducting mandatory SSS/PhilHealth/Pag-IBIG contributions and non-taxable allowances
• The 13th-month pay plus other benefits are tax-exempt up to a combined ₱90,000
• Self-employed individuals and professionals with annual gross receipts of ₱3 million or less can elect an 8% flat tax on gross receipts minus ₱250,000, as an alternative to graduated rates plus the 3% percentage tax
• Most wage earners are exempt from filing their own return through substituted filing (the employer's year-end adjustment, via BIR Form 2316)

4-4 Value-added tax (VAT) and withholding

• The standard rate is 12%. The registration threshold is ₱3 million in annual gross sales
• Below the threshold, businesses are non-VAT and subject to a 3% percentage tax (this was temporarily 1% under CREATE, reverting to 3% in July 2023)
• From 2 June 2025, 12% VAT also applies to non-resident digital service providers (NRDSPs) (RA 12023, implementing regulations RR 3-2025, later RR 14-2025 and RMC 47-2025). Covered categories include search engines, online marketplaces, cloud services, online advertising, and digital goods. Determination relies on indicators such as billing address, IP address, and SIM registration
• For B2B transactions, the Philippine VAT-registered buyer withholds and remits VAT via a reverse charge; for B2C transactions, the provider itself remits. E-marketplace operators that control the terms of the transaction or handle order fulfillment are liable for the VAT on transactions conducted through their platform
• Registration is generally handled through the VDS Portal, with options via ORUS or, where an agent is used, RDO 39 (South Quezon City). The registration threshold is annual gross sales exceeding ₱3 million
• 注 Non-resident digital service providers cannot claim input VAT credits. Also, the BIR Commissioner has the power to block the services of non-compliant providers

The withholding tax system is divided into wage withholding, Expanded Withholding Tax (EWT), and Final Withholding Tax (FWT). Professional fees, for example, are subject to a 5% or 10% withholding at the time of payment, with BIR Form 2307 issued to the payee for use as a credit when filing their own return.

4-5 CMEPA (RA 12214) — reforms with direct impact on investors

Signed 29 May 2025, effective 1 July 2025 (publicized via BIR RMC 60-2025). Its aims are ① aligning tax rates with neighboring countries, ② simplifying the tax system, and ③ lowering the cost of market entry. It is projected to raise more than ₱25 billion in additional revenue over 2025–2030.

Cutting the STT to one-sixth of its former level is the single largest change in recent years to the cost of trading on the PSE. 注 Meanwhile, the old assumption that "deposits of 5 years or more are tax-exempt" has disappeared. Watch for this in older investment-related articles.

4-6 BIR e-filing and digitalization

The Bureau of Internal Revenue (BIR) administers national taxes.

• Under the EOPT Law (RA 11976), taxpayers can now "file and pay anywhere" — at any RDO or accredited agent bank (AAB) — and the 25% surcharge for filing at the wrong jurisdiction has been abolished
• Taxpayers fall into four size-based tiers by gross sales: Micro (up to ₱3 million) / Small (₱3–20 million) / Medium (₱20 million–₱1 billion) / Large (over ₱1 billion). Micro and small taxpayers get relief such as simplified bookkeeping
• The ₱500 annual registration fee has been abolished
• CREATE MORE (RA 12066) gives the BIR the authority to mandate electronic invoicing, with RR 11-2025 expanding its coverage
• 85% of 2025 tax revenue was collected through electronic payment (BIR)

Collection performance: 2025 collections came in at ₱3.105 trillion, missing the ₱3.2 trillion target. The BIR attributed the second-half shortfall to collection activity being significantly disrupted by the start of investigations into the flood-control corruption scandal. The 2026 target is ₱3.579 trillion (roughly 11% higher year-on-year).

4-7 Estate, gift, and property-related taxes

• 注 The estate tax amnesty ended on 14 June 2025. The amnesty under RA 11213 (extended by RA 11956) applied only to deaths on or before 31 May 2022. The regular rules now apply again, and a late filing after the deadline incurs a 25% surcharge (50% for fraud) plus interest. The House of Representatives passed a bill (HB 6614) in December 2025 by a vote of 280–0 that would extend the amnesty through 31 December 2028 and expand eligibility to deaths through 31 December 2024, but it remains under deliberation, and has not passed, in the Senate
• For those who filed for the amnesty within its original deadline, there is no deadline for submitting the extrajudicial settlement or similar documents (RMC 033-2026, 27 April 2026). However, without such submission, the eCAR (electronic Certificate Authorizing Registration) will not be issued
• If the date of death falls between 1998 and 2017, the old progressive rates of 5–20% apply. It is the "date of death," not the "date of filing," that determines which law applies
• RPVARA (RA 12001): signed 13 June 2024, with implementing rules approved by the DOF on 10 December 2024 and publicized via BLGF Memorandum Circular 001.2025. It introduces the Schedule of Market Values (SMV) as the sole basis for real property valuation, and reorganizes the Bureau of Local Government Finance (BLGF). Assessors have two years to update the SMV, followed by general revisions every three years thereafter. The increase in real property tax in the first year a new SMV applies is capped at 6%. Until the new SMV is in place, existing zonal values and similar bases continue to apply. A two-year amnesty for delinquent real property tax and special levies is also provided for (exact deadline details still need confirmation)

5. Taxation of foreigners and non-residents, and the Japan–Philippines tax treaty

5-1 Three categories

• Philippine citizens (residents) are taxed on worldwide income, but foreigners — whether resident or non-resident — are taxed only on Philippine-source income. This is a major difference from resident taxation in Japan
• 注 The NRANETB's 25% applies to "gross," not "net," income. Since no expense deductions apply at all, the effective burden can end up heavier than under progressive taxation
• The fringe benefit tax on managerial and supervisory employees is generally 35% (on a grossed-up basis), but 25% for NRANETBs

5-2 The Japan–Philippines tax treaty

On 28 May 2026, Japan and the Philippines signed a new tax treaty. It fully replaces the current treaty, which took effect in 1980 and was partially amended in 2008.

Other changes include ① a new arbitration mechanism for cases not resolved through mutual agreement within two years, ② strengthened information exchange, and ③ the introduction of a principal-purpose-test anti-abuse provision.

注 Signature does not mean entry into force. Both countries must complete their domestic procedures (in Japan's case, Diet approval), and the treaty takes effect 30 days after the diplomatic exchange of notes confirming approval. As of August 2026, it has not entered into force, and the current treaty continues to apply in practice.

[Reference: main ceiling rates under the current treaty]

注 Treaty-reduced rates are not applied automatically. They typically require a Request for Confirmation or a Tax Treaty Relief Application (TTRA) with the BIR's International Tax Affairs Division (ITAD), and, for dividends, interest, and royalties, submission of a CORTT form, among other steps. Procedural rules change frequently, so check the latest circular for each case.

6. Accounting standards and the SEC

6-1 PFRS (Philippine Financial Reporting Standards)

A framework that adopts IFRS almost wholesale. The Financial and Sustainability Reporting Standards Council (FSRSC) reviews IASB standards and adopts them as PFRS; the Board of Accountancy (BOA) and Professional Regulation Commission (PRC) approve them; and the SEC incorporates them into financial reporting rules via the amended SRC Rule 68. In principle, the effective dates match those of IFRS.

A three-tier structure applies: Full PFRS / PFRS for SMEs / PFRS for Small Entities. Which tier a company must use is determined by the SEC's size classifications.

With major changes stacking up for financial years beginning 1 January 2027, 2026 is effectively "a year of transition preparation."

注 PFRS 18 requires retrospective restatement of comparative periods, so work must begin during 2026 to be ready in time.

6-2 The role of the SEC (Securities and Exchange Commission)

The Securities and Exchange Commission (SEC) is responsible for ① registering all corporations and partnerships, ② regulating the registration and issuance of securities, ③ overseeing disclosure by public companies, and ④ prosecuting investment fraud. Its role roughly combines that of Japan's Legal Affairs Bureau and Financial Services Agency.

• Its governing law is the Revised Corporation Code (RA 11232). Incorporators can number 1 to 15, and One Person Corporations (OPCs) are permitted. Corporate existence is, in principle, perpetual
• Registration is consolidated into the online eSPARC (Electronic Simplified Processing of Application for Registration of Company) system, which handles domestic stock corporations, OPCs, and non-stock corporations, as well as partnerships and Licenses to Do Business for foreign corporations
• OneSEC (One Day Submission and E-registration of Companies) is a fully paperless, high-speed route that can issue a digitally signed certificate of incorporation in as little as one day
• 注 OneSEC is available only under limited conditions: all shareholders and officers must be Philippine-resident natural persons (i.e., 100% Filipino-owned), the corporate name must include an industry descriptor, the name must not contain a trademark or abbreviation, corporate existence must be perpetual, and the registered address must not be in an economic zone. Applications involving foreign shareholders, regulated industries, or unusual share structures go through "Regular Processing", which still requires notarized paper submissions
• e-SECURE is the eKYC and credential-verification module for users, and eSAP is the authentication portal for electronic documents
• As of 2026, name reservation, document submission, and fee payment can all be done at the SEC without an appointment, but notarization of the articles of incorporation, treasurer's affidavit, and similar documents by a Philippine notary public is still required

注 SEC registration is not the same as being allowed to operate. A separate municipal business permit (Mayor's Permit), BIR registration, and employer registration with SSS/PhilHealth/Pag-IBIG are all also required. Many market-entrant companies run into trouble by not understanding this multi-step process and assuming "registration is done, so we can start operating."

7. Common practical mistakes (summary)

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