Last updated: 11 October 2026 · Rates checked against: PwC Philippines on RA 12214 (CMEPA) and bank advisories issued July 2025
Reviewed by Zia Shahid, Buzdy Banking Editor · Our methodology
In this guide
The rules here changed on 1 July 2025, and many savers have not been told. If you opened a long-term time deposit expecting it to be tax-free, read the grandfather clause below.
A flat 20% final withholding tax now applies to interest on bank deposits.
It applies regardless of how long the money is held — the old exemption for long-term deposits has been removed.
Foreign currency (FCDU) deposit interest also moved to 20%.
Republic Act 12214, the Capital Markets Efficiency Promotion Act (CMEPA), effective 1 July 2025.
What changed on 1 July 2025
Before CMEPA the Philippines taxed deposit interest on a sliding scale tied to how long the money stayed put. A peso time deposit held five years or more was exempt; shorter terms were taxed between 5% and 20%.
| Deposit type | Before | From 1 Jul 2025 |
|---|---|---|
| Peso deposits, any tenure | tiered 0–20% | 20% flat |
| Long-term deposits (5 years+) | exempt | 20% |
| Foreign currency (FCDU) | 15% | 20% |
The grandfather clause — this matters
Money already deposited before the law took effect keeps its original tax treatment until maturity. So an existing long-term time deposit is not retrospectively taxed; it is new deposits, and renewals, that fall under the flat rate.
If you hold a long-term deposit opened before July 2025, check what happens on rollover before letting it renew automatically.
What "final withholding tax" means
The bank deducts it and remits it. The income is not reported again in your annual return, and over-withholding is not refundable in the way an ordinary creditable tax would be. What arrives in your account is what you keep.
Frequently asked questions
Does the 20% apply to my existing long-term deposit?
Not until it matures. Deposits placed before the law took effect retain their original treatment until maturity.
Is a savings account treated differently from a time deposit?
Under the uniform rate, interest from deposit accounts is taxed at 20% regardless of the product or holding period.
Do I declare this in my annual return?
It is a final tax, so the interest is not reported again.
What about dollar accounts?
Interest on FCDU deposits for residents moved from 15% to 20% on the same date.
Sources
This is information, not tax advice. The figures above were checked against the source named at the top of this page on 11 October 2026. Tax rules change, usually with each annual budget. For a decision about your own money, speak to a qualified tax adviser in your country.
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