Philippine News

Insight: The 2020 State of Online Taxation – 72.1% of online taxpayers show decreased income after COVID-19 community quarantine

MANILA, PHILIPPINES — Freelancers and small business owners from across different industries were among those who were hit hardest by the COVID-19 community quarantine, with online forums buzzing with anecdotes of massive loss of jobs.

Now, data from Taxumo, the Philippines’ pioneering online web-based tax filing and payment platform, reveals the extent of the pandemic’s economic impact.

Insights gathered after the 2019 annual income tax filing deadline this July 15 from Taxumo users revealed that 72.1% of online taxpayers declared a decrease in income after the community quarantine was announced30.3% of which had totally no income. 

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Meanwhile, 19.1% of online taxpayers reported an increase of 65.40% to their monthly income.

In response to this, Taxumo has launched various efforts to assist the community of freelancers and small business owners. 

Taxumo Lifeline, one of the new services Taxumo launched, is an affordable subscription package specially designed for people who have zero income and who may be on the brink of closing their businesses. For Php 200 a month (paid annually at Php 2,400/year), taxpayers can fully automate their zero-amount tax forms. This means that they can continue filing their taxes, keeping their business alive until they finally are able to bounce back. They can easily upgrade their subscription should they begin to earn again. 

How has Online Taxpayer Income Changed from 2018 to 2019? 

Compared to their income in 2018, 62.2% of online taxpayers declared an average of 39.10% decrease in their income. 37.8% meanwhile reported the opposite, with an average increase of 192.33% in their 2019 income versus 2018. 

Socioeconomic Status of Online Taxpayers 

Basing on the definition set by the Philippine Institute for Development Studies, 27.9% of online taxpayers can be classified as poor (earning less than PHP 9,520 per month), while 21.9% are lower-income (earning between PHP 9,520 and PHP 19,040 per month). 4.5% of online taxpayers can be considered rich (earning at least PHP 190,400 a month.)

However, these declared incomes may not be representative of their household’s total income, as these online taxpayers may be part of dual- or multiple-income households.  

Since its launch, Taxumo has grown to close to 25,000 users in its platform. To date, Php 723,501,080 in total income and Php 259,594,260 total expenses have been reported on Taxumo. Php 24,719,129 in total taxes have been collected from online taxpayers since Taxumo’s inception. 

Online Tax Payments: What’s Next?  

With the Bureau of Internal Revenue’s (BIR) release of revenue memorandum circular 60-2020, strongly compelling online sellers and workers to register and pay the appropriate taxes for their businesses, the agency must anticipate the influx of new registrations and tax payments.

While the community quarantine proves to be an additional challenge to business registration and tax compliance, certified electronic tax service providers (e-TSPs) immensely help taxpayers to comply with the law.  

 “As the country’s pioneering tax filing and payment platform, Taxumo has been tirelessly assisting small business owners, self-employed professionals, and freelancers easily comply with the business registration and tax rules and regulations,” says EJ Arboleda, Founder & CEO of Taxumo. “Our online platform was built with ease and convenience in mind, and we are constantly innovating our website to help our users focus more on their passion and worry less with their taxes.”

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