MANILA, Philippines — The country’s digital workforce, including freelancers, online sellers, and micro-business owners, is rapidly changing how Filipinos earn and comply with taxes, according to the newly released “State of Online Taxation 2025” report from Taxumo.

The report highlights that more individuals are embracing formal tax compliance as a natural step in growing their digital livelihoods, amid intensified efforts by the government to expand the tax base.

Digital earnings gain economic weight

Estimates indicate that around 1.5 million Filipinos are active on global freelancing platforms, with the number increasing significantly when local online gigs and informal e-commerce are included. From 2019 to 2020, the country recorded a 208% increase in freelance earnings—the fastest growth in Asia. By 2021, about 8.7 million Filipinos, or one in five workers, were earning through online platforms.

As of 2024, the digital economy is valued at ₱2.25 trillion, accounting for 8.5% of GDP. E-commerce alone contributed ₱302 billion.

The surge is driven by a young, tech-savvy population that has embraced digital work—from content creation to IT consulting—as a sustainable primary income source.

Sharp rise in online tax filings

Taxumo reported that income tax filings through its platform have grown by an average of 49% annually since 2020, with many users being first-time or previously informal earners.

The trend is not limited to Metro Manila, as more provincial users have also started using digital platforms for tax compliance, aided by accessible digital banking and invoicing tools.

Not just high-income earners

About 47.5% of online tax filers fall under the middle-income category, while 30% are officially classified as poor under national income thresholds.

The report noted that many low-income earners are choosing to become tax-compliant to access financial services such as bank loans, or to legitimize their businesses through permits and formal recognition.

Millennials dominate, Gen Z on the rise

Millennials comprise 66.8% of online tax filers, but Gen Z is gaining ground, accounting for 22.1%, up from 17.9% the previous year. While Gen Z contributed only 12.7% of total online income tax in 2025, the report noted that younger workers are formalizing income earlier than previous generations.

Women lead digital tax compliance

Women, particularly Millennial women, make up the largest group of Taxumo users, with female Millennials accounting for about 40%. Among Gen Z users, 13.6% are female, compared to 7.9% male.

The report pointed to women’s increasing participation in digital entrepreneurship, especially in creative and service-based sectors.

A shift in taxation culture

Taxumo concluded that the growing number of self-employed and digitally connected Filipinos are becoming more tax-aware, signaling a shift toward a more formal and inclusive tax culture. The report emphasized the importance of continued support, education, and incentives to help sustain this momentum.