Capital Gains Tax in Philippines 2025: Complete Guide with Latest Rates
The Philippines tax system underwent significant reforms in 2025, particularly affecting Capital Gains Tax (CGT) rates and regulations. Whether you’re selling real estate, stocks, or other capital assets, understanding these changes is crucial for proper tax compliance and financial planning.
What is Capital Gains Tax?
Capital Gains Tax is a tax imposed on the profit realized from the sale of capital assets. In the Philippines, CGT applies to various types of assets, including real estate, stocks, and other investments. The tax is calculated based on the difference between the selling price and the cost basis of the asset.
Latest Capital Gains Tax Rates for 2025
Real Estate Properties
6% Capital Gains Tax applies to the sale of real estate properties, including:
- Land and buildings
- Condominium units
- Houses and lots
- Commercial properties
Important Note: The proposed increase from 6% to 10% was withdrawn by the Department of Finance in April 2025 due to stronger-than-expected revenue collections.
Stocks and Securities
Stock Transaction Tax: Reduced from 0.6% to 0.1% effective July 1, 2025, under the Capital Markets Efficiency Promotion Act (CMEPA).
Capital Gains on Foreign Shares: 15% tax rate applies to the sale of shares in foreign companies.
Other Capital Assets
- Domestic stocks: Subject to stock transaction tax (0.1%)
- Bonds and other securities: Varies based on type and holding period
- Mutual funds and UITFs: Exempt from documentary stamp tax
Key Changes in 2025
1. Withdrawal of Tax Increase Proposal
The Department of Finance withdrew its proposal to increase capital gains tax from 6% to 10% in April 2025. This decision was based on:
- Stronger-than-expected revenue collections (13.55% surge in Q1 2025)
- Steady progress toward fiscal consolidation goals
- PHP 931.5 billion total tax collections in the first quarter
2. Capital Markets Efficiency Promotion Act (CMEPA)
Effective July 1, 2025, CMEPA introduced several reforms:
- Reduced stock transaction tax from 0.6% to 0.1%
- Uniform 20% tax rate for all interest income
- 15% capital gains tax on foreign shares
- Reduced documentary stamp tax to 0.75% on share issuance
- Exemptions for mutual funds and UITFs from documentary stamp tax
How to Calculate Capital Gains Tax
For Real Estate
Capital Gains = Selling Price - Cost Basis
CGT = Capital Gains × 6%
Example:
- Selling price: PHP 2,000,000
- Cost basis: PHP 1,500,000
- Capital gains: PHP 500,000
- CGT: PHP 500,000 × 6% = PHP 30,000
💡 Pro Tip: For quick tax calculations and salary breakdowns, use our Philippines Tax Calculator to estimate your take-home pay and understand how different income levels affect your overall tax burden.
For Stocks
Stock Transaction Tax:
Tax = Transaction Value × 0.1%
Example:
- Transaction value: PHP 100,000
- Stock transaction tax: PHP 100,000 × 0.1% = PHP 100
Exemptions and Special Cases
Real Estate Exemptions
- Principal Residence: One-time exemption for sale of principal residence (if proceeds are used to purchase a new principal residence within 18 months)
- Inherited Properties: No CGT if sold within one year of inheritance
- Properties sold below market value: May qualify for reduced rates
Stock Exemptions
- Long-term capital gains: Different rates may apply based on holding period
- Tax-exempt institutions: Certain organizations may be exempt
- Small transactions: Minimal amounts may be exempt from reporting
Important Deadlines and Requirements
Filing Requirements
- BIR Form 1707: For individual taxpayers
- BIR Form 1707A: For corporations
- Deadline: Within 30 days from the date of sale
Documentation Needed
- Deed of Sale or Stock Certificate
- Tax Clearance Certificate
- Proof of payment (receipts, bank statements)
- Appraisal reports (for real estate)
- Previous tax returns (if applicable)
Tips for Minimizing Capital Gains Tax
1. Hold Assets Longer
Consider holding assets for longer periods to potentially qualify for lower tax rates or exemptions.
2. Offset with Capital Losses
Use capital losses from other investments to offset capital gains, reducing your overall tax liability.
3. Timing of Sales
Plan the timing of your sales to optimize tax benefits, especially for real estate transactions.
4. Professional Advice
Consult with tax professionals to ensure compliance and identify legitimate tax-saving strategies.
5. Use Tax Planning Tools
Leverage online calculators like our Philippines Tax Calculator to model different scenarios and understand how your salary and investment income interact with various tax obligations.
Common Mistakes to Avoid
- Underreporting sale price: Always report the actual selling price
- Missing deadlines: File returns within 30 days to avoid penalties
- Incorrect cost basis: Ensure accurate calculation of original cost
- Ignoring exemptions: Check if you qualify for any exemptions
- Poor record keeping: Maintain proper documentation of all transactions
Recent Market Impact
The 2025 tax reforms have created a more favorable investment environment:
- Lower transaction costs for stock trading
- Simplified tax structure for interest income
- Increased market competitiveness compared to neighboring countries
- Enhanced investor confidence due to stable tax rates
Future Outlook
The withdrawal of proposed tax increases and implementation of CMEPA reforms suggest:
- Continued stability in tax rates
- Potential for further reforms to enhance market efficiency
- Focus on attracting foreign investment
- Balanced approach between revenue generation and economic growth
Conclusion
Understanding Capital Gains Tax in the Philippines for 2025 is essential for anyone involved in selling capital assets. The recent reforms have generally made the tax system more investor-friendly, with reduced rates for stock transactions and maintained stability for real estate sales.
Key takeaways:
- Real estate CGT remains at 6%
- Stock transaction tax reduced to 0.1%
- Foreign shares subject to 15% CGT
- File returns within 30 days
- Consider professional advice for complex transactions
Stay informed about any future changes and ensure proper compliance to avoid penalties and maximize your investment returns.
References and Sources
KPMG Philippines - “Legislation Rationalizing Tax Rates on Passive Investments Signed into Law” (July 2025) - kpmg.com
Philippine Star - “No new taxes to be imposed, says DOF” (April 2025) - philstar.com
Tax Calculator Philippines - “Capital Gains Tax Philippines” (2025) - taxcalculatorphilippines.org
PwC Philippines - “CMEPA: A New Era for Investment Taxation” (2025) - pwc.com
Bureau of Internal Revenue (BIR) - Official tax forms and regulations - bir.gov.ph
BusinessWorld - “Capital gains tax hike expected to make land more costly” (May 2025) - bworldonline.com
This guide is for informational purposes only and should not be considered as professional tax advice. Always consult with a qualified tax professional for specific situations.