Philippines Clarifies Tax Deduction for Maternity-Pay Salary Differential

Connecticut Enacts Paid Family and Medical Leave

Employers in the Philippines can deduct the salary differential they pay to employees on maternity leave, according to a 9 Oct 2019 circular issued by the Bureau of Internal Revenue. The clarification follows the expansion of paid maternity leave to 105 days in March 2019.

Private-sector employees on paid maternity leave must receive full pay for 105 days. Employers pay the difference between the maternity benefit received from the Social Security System and the employee’s average weekly or regular wage. The circular confirms that the salary difference is a benefit exempt from income and withholding taxes, so employers can claim a tax deduction for the differential.

Related Resources

Non-Mercer Resource

  • Revenue Memorandum Circular 105-2019 (Bureau of Internal Revenue, 9 Oct 2019)

Mercer Law & Policy Resource

Pauline Cardenas
by Pauline Cardenas

Business Control and Risk Officer, Mercer Health

Fiona Webster
by Fiona Webster

Principal, Mercer’s Law & Policy Group

Stephanie Rosseau
by Stephanie Rosseau

Principal, Mercer’s Law & Policy Group

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