Salary differential from longer maternity leave tax-exempt

The salary differential from the longer maternity leave now extended to workers in the private sector will be tax-exempt as it is regarded as a benefit, the Bureau of Internal Revenue (BIR) said.

“The maternity benefit of the female worker has been expanded from the previous 100 percent of the average daily salary credit to full pay or salary, which includes now the salary differential as its component … it is therefore clear that salary differential is considered as a benefit,” BIR  Commissioner Caesar  Dulay said in Revenue Memorandum Circular (RMC) No. 105-2019 dated Sept. 3, but posted on the BIR website only on Oct. 9.

Dulay said the salary differential is exempt from income and withholding taxes. —BEN O. DE VERA