Section 2Sec./Art. 2

Declaration of Policy. - The financial sector plays a significant role in the long-term growth of the national economy. A key policy consideration is to allow capital markets to develop as efficiently as possible, with the least intervention. The optimal taxation of capital markets, and the products and transactions that come with them, is an essential element in developing capital markets. Towards this end, the State recognizes the necessity of a simpler, fairer, more efficient, and regionally competitive passive income tax system to encourage savings, as well as develop and deepen capital markets.

In the same vein, the State recognizes tax administration as a driver of economic growth, and the equitable taxation of similar products as an essential aspect of progressive taxation. By making tax compliance easier and more equitable, progressivity is ensured, tax effort is improved, discretion is eliminated, and trust in the taxation system is enhanced. Accordingly, the State adopts the following policies:

(a) The State shall endeavor to simplify an otherwise complex tax system for easy compliance;

(b) The State shall ensure that the taxation of passive income is equitable across all stakeholders and discourages arbitrage opportunities;

(c) The State shall promote the development and tax competitiveness of capital markets within the context of globalization, increase capital mobility, and financial inclusion;

(d) The State shall promote and incentivize investment in the trading of equity and debt securities; and

(e) The State shall aid in the capacity of corporate entities to raise capital through capital markets.