Income Tax — Additional or Supplementary Benefits Paid by the SSS

June 21, 1979 BIR RULING NO. 045-79 Income tax additional or supplementary benefits paid by the SSS This refers to your letter dated July 18, 1978 reading in part, thus: "Procter & Gamble Philippine Manufacturing Corporation gives its employees maternity leave benefits in an amount over and above that required under the Social Security Act as amended by P.D. 1202. While it is clear that the amount of maternity leave benefits payable by the SSS are tax exempt, we would like to respectfully request confirmation that the amount being paid by the Company as amended by P.D. 1201 is likewise tax exempt." Specifically, you want to know whether or not that Company should withhold income tax on said supplementary maternity leave benefits. In reply, please be informed that Section 16 of Republic Act No. 1161 as amended, expressly exempts only all benefit payments made by the SSS from all kinds of taxes, fees or charges and legal processes and liens. Since there is no mention that the additional or supplementary benefits paid by an employer to his employee beyond that required by the law shall likewise be so exempt, no exemption from tax can be allowed for these additional or supplementary benefits, in conformity with the rule that exemption from taxation must be granted by clear legislative intent and must be categorically and unmistakably expressed, defined and founded upon plain language which does not admit of doubt and ambiguity. Consequently, the amounts that you pay as supplementary maternity leave benefits over and above the amount specified by the Social Security Law as amended by Presidential Decree No. 1202 are subject to tax being part of compensation for services rendered to the company and are therefore taxable income to the recipients. Accordingly, you are obliged to withhold income tax on said supplementary maternity leave benefits.