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  • The Expanded Maternity Leave Benefit Is Now Tax-Free!

    According to the Bureau of Internal Revenue (BIR), the salary differential private employers have to cover is considered a benefit under the SSS law.
    by Rachel Perez .
The Expanded Maternity Leave Benefit Is Now Tax-Free!
PHOTO BY iStock
  • An early Christmas gift to all Filipino women! We are now entitled to receive a full salary for the entire 105-Day Expanded Maternity Leave Act, as stated in Republic Act No. 11210 — and all of it is non-taxable.

    Filipino new moms’ maternity benefit has been improved from the previous 100-percent average daily salary credit to full pay or salary. The Social Security System (SSS) computes the maternity benefit based on an employee’s average daily salary credit. If a working woman earns higher than this, her employer should cover the differential amount, and this is exempt from tax, according to a memorandum released by the Bureau of Internal Revenue (BIR).

    “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,” BIR Commissioner Caesar Dulay stated in Revenue Memorandum Circular (RMC) No. 105-2019. The circular was dated September 3, 2019, but posted on the bureau’s website only on October 9, 2019.

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    Accordingly, the salary differential is considered as a benefit under the SSS law, clarifies Dulay, and as such, “is exempt from income and withholding taxes.”

    “This is welcome news,” Senator Risa Hontiveros, principal author and sponsor of the law, told GMA News Online. “Now, mothers and their families will not only be able to enjoy the biological benefits of the EML law, but their financial welfare is also looked after, particularly those who earn just enough to meet basic needs and still feel the pinch in times of economic strain,” she added.

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    The computation and the amount of your SSS maternity benefit are based on your MSC of your SSS contributions. MSC is the compensation base or salary level for contributions and benefits related to your total earnings for the month. This salary bracket is what the SSS uses to determine how much you are entitled to when you apply for a loan of benefit. (Make sure you apply for your SSS maternity benefit here).

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    The agency’s MSC brackets have since been adjusted due to the increase in monthly contributions starting in January 2019. (Click here for the latest SSS contribution table.) It also means that SSS can cover a higher ceiling amount for SSS maternity benefits, as high as Php70,000.

    Under the law’s Implementing Rules and Regulations (IRR), SSS pays the full maternity benefit for employed members, members who contribute voluntarily, and those who have been separated from their employers before giving birth are to be paid. Employers from the private sector shall pay for the difference between the full salary of its female employee and the actual SSS maternity benefit received.

    The SSS and the Department of Labor and Employment (DOLE) used to treat the extra pay as part of the salary and benefit of the employees, making it taxable.

    To know what you're entitled to under the Expanded Maternity Leave Law, click here.

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