DOF clarifies 20% FWT on interest income

The Department of Finance (DOF) clarified that banks have started implementing a uniform 20 percent final withholding tax (FWT) on interest income from deposits, in line with the Capital Markets Efficiency Promotion Act (CMEPA), signed into law by President Ferdinand 'Bongbong' Marcos Jr.

Palace Press Officer Claire Castro emphasized during a press briefing that only interest earned from savings is taxed at 20 percent and not the total amount deposited, addressing public confusion over online misinformation.

Castro clarified misconceptions about the tax implementation, stating that the tax on interest earnings has been in place since 1998 and stressed the importance of discernment regarding information shared on social media.

The standardized tax rate will generate an estimated P9 billion in revenues from 2025 to 2028 with no impact on financial instruments issued before July 1, ensuring existing long-term deposits remain unaffected.

Under CMEPA, all interest income earned from savings or deposit products is taxed at a uniform 20 percent rate starting July 1, 2025, addressing previous tiered tax rates and promoting fairness in the Philippine tax system.