BIR: Pay from longer maternity leave is tax-exempt

The salary differential from longer maternity leave for workers in the private sector is tax-exempt because it is considered as a benefit, the Bureau of Internal Revenue (BIR) said.

“It is clear that salary differential is considered as a benefit,” said Revenue Commissioner Caesar B. Dulay in a memorandum dated Sept. 3 but posted on the BIR website only last Oct. 9.

Dulay cited provisions of Republic Act No. 11210, or the 105-Day Expanded Maternity Leave Act, and guidelines from the Civil Service Commission, Department of Labor and Employment and Social Security System.

The full pay that workers on maternity leave are to receive was exempt from withholding or income taxation, Dulay said.

The law required private sector employers to pay the salary differential of workers on maternity leave “and their average weekly or regular wages for the duration of the maternity leave.”/TSB