Why Filipinos Earning Online are Quietly Helping Drive the Economy

Manila’s burgeoning digital workforce made up of online sellers, micro-business owners, and other freelancers are quietly becoming massive contributors to the economy, according to a study conducted by the online tax compliance platform Taxumo.

In its State of Online Taxation 2025 report, the company said the massive Filipino digital workforce, at around 1.5 million, contributed to the P2.25-trillion digital economy, which is about 8.5 percent of the country’s GDP last year.  Taxumo said that e-commerce alone contributed about P302 billion to the digital economy.

The explosive growth in online freelancers working on global e-platforms to earn money is seen in the 208 percent jump in freelance earnings in 2019 to 2020, which was the fastest in Asia.

“This momentum has been fueled by young, tech-savvy workers who adapted quickly to pandemic disruptions,” the report said. “From content creators and virtual assistants to online sellers and IT consultants, a generation has emerged that views digital work not as a stopgap, but as a sustainable, often primary source of income.”

Taxumo also noted that since 2020, annual income tax filings through its digital platform have increased at an average of 49 percent per year, with a lot of these being first-time or previously informal earners.

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“This signals not just higher awareness but also a cultural shift,” according to the report. “Digital platforms may have made compliance easier and more accessible for individuals who previously saw taxes as burdensome or irrelevant to their small operation.”

It added that the bulk of digital online tax filers also come from provinces outside of Metro Manila, amid the widespread use of online banking platforms.

A Look At Filipinos Who File Taxes Online, Work Digitally

Filipino online tax filers are not just those considered wealthy as Taxumo’s report shows that about 47.5 percent fell under the middle-income category. Unexpectedly, even 30 percent of those that filed their taxes online were classified as poor, based on the government’s national income thresholds.

This comes as labor groups continue to denounce regional wage boards for paltry minimum wage increases that fail to support workers cope with inflation and the skyrocketing prices of goods, citing the need for hikes to satisfy a living wage for the typical Filipino family.

Amnesty International defines a living wage as the minimum income needed for workers to meet their basic needs and to realize their human rights.

The growth in online earners stemmed from the need to shift work arrangements during the coronavirus pandemic in 2020.

The Philippine Statistics Authority reported that about 11.3 million workers were employed in digital sectors last year, with e-commerce platforms posting a share of 77.9 percent of this section of the entire workforce.

The Philippine Institute for Development Studies has said that the leap in workers moving to digital platforms was driven by the country’s large youth share and the need for flexible work environments.

In May this year, the Philippines’ labor force participation rate, or the number of Filipinos aged 15 years old and above in the workforce, increased to 65.8 percent from 63.7 percent a month earlier.

Taxumo noted that millennials continue to make up most of those that utilize the online tax space with a 66.8 percent share of filers. Millennial Women also account for about 40 percent of users, outnumbering their male counterparts.

Despite this, a surge of workers from the Gen Z age bracket was observed, up 22.1 percent from 17.9 percent last year.

Though, Gen Z workers only contributed to about 12.7 percent of total online income tax this year as they tend to formalize their income against older age groups.

“This pattern reflects both necessity and culture. Gen Z workers, many of whom started freelancing during the pandemic, are comfortable using digital tools and are more likely to view compliance as a default rather than an exception,” according to Taxumo. “It also suggests a long-term shift toward a more tax-aware workforce.”

Gen Z women are also gaining traction and increased engagement with online tax platforms at a 13.6 percent total share of all users compared to just 7.9 percent from Gen Z males.

The online tax compliance platform noted that this is due to a pattern of women’s increased participation in digital entrepreneurship and ventures linked to creative and service-based fields.

“The report suggests that as more Filipinos become self-employed and digitally connected, they are also becoming more tax-aware,” it said. “This highlights the need for the government and the private sector to work together to help these taxpayers.”