Millennials are still dominating, but Gen Zs are catching up
“The State of Online Taxation 2024″ by Taxumo
According to the “State of Online Taxation 2024” report, millennials remain the backbone of the online taxpayer demographic, contributing nearly 75% of income filings in 2024.
This generation, born between 1981 and 1996, continues to be a vital force in driving economic activity and generating tax revenue in the Philippines.
However, Gen Z (born after 1996) online taxpayers are quickly increasing, with their share of income filings rising from 9% in 2023 to 12.7% in 2024. This generation’s growing economic influence is indicative of their early entry into the workforce and their preference for digital solutions in managing their financial responsibilities. Gen Z’s growing participation showcases their adaptability and innovative approach to economic engagement.
The 2024 Online Taxation report also found that Female Millennials alone accounted for the highest percentage across all categories at 42.9%, followed by Female Gen Z at 10.6%. This indicates a strong presence of female representation in these younger generations within the socioeconomic spectrum.
Online Taxation: Informal employment rises, low-income earners experience downgrade in socioeconomic status
Despite facing economic challenges, the use of online tax payments has seen a significant rise. Tax collections through Taxumo have grown by approximately 58.45% year-on-year, reflecting a broader trend towards digitalization and ease of compliance. The Bureau of Internal Revenue (BIR) reported an 11% increase in tax collections in April, surpassing their target by Php35.114 billion.
However, informal employment remains a significant issue, with the IBON Foundation estimating that 41.6% of the workforce, or 20.4 million people, are engaged in informal work.
This includes domestic workers, self-employed individuals, and unpaid family workers. The prevalence of informal employment underscores the need for more robust economic policies and support systems.
The majority of Poor taxpayers who were Poor last year remained poor (65%.) 41% of individuals in the Low-Income category have experienced a decline in their socioeconomic status coming from a higher earning bracket, while 40% have seen an improvement in their socioeconomic status.
None of the individuals in the Rich category has experienced a decline in their economic status, but 44% are newly Rich – finally breaking out of their High-Income status from the previous year.
Service providers are the top online taxpayers
Businesses focused on services, such as events management, travel agencies, and social media agencies, lead the way in online tax filings. The IT & Tech sector also has a strong presence, highlighting a growing technology-driven economy.
Taxumo, the company behind the report, is currently stepping up its efforts to provide essential support to online sellers who are still grappling with the BIR’s new tax regulations and extended compliance deadlines.
The BIR has recently issued Revenue Regulations No. 16-2023, which sets out guidelines on the imposition of withholding tax on gross remittances by electronic marketplace (e-marketplace) operators and digital financial services providers to online sellers/merchants, in connection with goods and services sold or paid through the former’s platform/facility.
The regulations started to take effect last January 12, exactly 15 days after its publication in the Manila Bulletin on December 27, 2023.
The implementation of a one per cent withholding tax on online sellers was initially set by the BIR on April 14, 2024, but it has since been moved to July 14, 2024, to allow electronic marketplace operators to better adjust to the changes brought about by the new revenue regulations.
To address this need, Taxumo is stepping up its efforts to provide essential support to online sellers who are still grappling with the BIR’s new tax regulations and extended compliance deadlines.
With the BIR’s recent initiatives to formalize tax obligations for online sellers, including the latest extension announced in RMC No. 55-2024, Taxumo aims to simplify the tax compliance process, ensuring that Filipino entrepreneurs can focus on growing their businesses without the added stress of navigating complex tax requirements.
Understanding that tax obligations can be daunting, Taxumo is committed to demystifying the process for online sellers.
To this end, Taxumo is offering a free Tax 101 session specifically designed to help online entrepreneurs understand the basics of tax compliance, including how to issue receipts, understand the 1% withholding tax, and determine the most budget-friendly tax rate options for their businesses — whether be it for a Non-VAT or VAT entity, or to go with the 8% or graduated tax rate and which deduction method (OSD, or Itemized) should they use.
For a deeper dive into the insights and recommendations of the 2024 State of Online Taxation report, visit txmo.co/SOOT2024
This Press Release has also been published on VRITIMES