MANILA, Philippines – Can a web application help make it easy for you to pay your taxes?
Now it can. A web-based tax compliance app that helps small and medium businesses (SMBs), professionals, and freelancers compute and pay for their taxes without a hassle was introduced in the country last November in time for the start of the coming year’s tax season.
The tech startup behind the service, Taxumo, is one of this year’s 10 recipients of equity-free funding support from IdeaSpace Foundation, the accelerator unit of the PLDT Group.
Ginger Arboleda, Taxumo’s chief operating officer, told The STAR in an interview that since the launch, some 200 users have signed up for the service in Metro Manila. The company is eyeing to expand its service nationwide soon.
A business owner himself before co-founding Taxumo, Arboleda, who owns and runs Manila Workshop, an organizer of lifestyle learning events geared towards helping people become entrepreneurs, narrates the tedious process of filing monthly, quarterly and yearly taxes.
“Taxes are filed every 20th of the month, on the 15th day after the quarter ended for the quarterly tax, and before April of the following year for the annual income tax. I used to collect all the receipts, manually encode them, and send them to a freelance accountant,” she narrated.
Tedious and stressful as it was, her husband, who works full time for a tech company, decided to develop a program to automate the manual process of filing the tax return for her own benefit.
This was the beginning of what eventually became Taxumo.com, which takes care of the taxation part of the accounting process for small businesses, freelancers, and professionals.
The web application can also track income and expenses online, autofill tax paperwork and pay tax dues anytime, anywhere.
The homepage of tax compliance app Taxumo.com.
“The process of complying with taxation including documentation work, filling out BIR forms, minding the regulations and exemptions, is really difficult even for somebody with an accounting background,” she said. “Taxumo wants to simplify everything so the business owner can focus on other things.”
Evan Tan, Taxumo’s chief marketing officer, said that part of the startup company’s goal is also to spread awareness that even people who don’t have full-time jobs and derive income only from freelance jobs or professional services need to file income taxes.
A recent report released by The World Bank Group and PwC, “Paying Taxes 2017,” shows that economies around the world continue to make progress in simplifying and reducing the burden of tax compliance on businesses. It said the total tax rate decreased by 0.1 percentage points to 40.6 percent; time to comply declined by eight hours to 251 hours; and the number of payments by 0.8 to 25 payments.
“Globally, the most common feature of tax reforms in the past year was the introduction or enhancement of electronic systems for filing and paying taxes. Twenty-six economies implemented such changes,” it added.
Undoubtedly, technology is playing and will continue to play a key role in improving tax compliance.
Arboleda said there are approximately two million self-employed professionals (SEPs) in the country who are potential users of the service, such as doctors, lawyers, consultants, financial advisors, real estate agents, and online freelance workers in addition to small entrepreneurs who are looking for ways to make tax compliance less burdensome.
In the Philippines, the Senate report “Taxing SEPs at a glance” showed that in 2012, there were 11.1 million BIR-registered compensation earners. In the same year, 3.2 million professionals were registered with the PRC but only 1.9 million registered as SEPs with the BIR. Of this number, only 28.4 percent actually filed tax returns. The gap obviously needs to be narrowed down. Part of the solution is awareness of the need to pay taxes and a facility to make tax compliance hassle-free.
To use the Taxumo facility, users need to open an account with Taxumo.com. SMBs need to be duly registered companies, while freelancers and professionals need to have a Bureau of Internal Revenue (BIR) registration.
“Taxumo is really for businesses and individuals who are already registered with the BOR, but we have a partner that helps small organizations and individuals register their businesses or themselves for a fee. Once you have the certificate of registration from the BIR, you can start using our service,” Tan said.
Arboleda said users can encode their income and expenses, and the system automatically computes the tax payment due for the month, the quarter, or for the year. Taxumo can also make the payment directly to the BIR before the due date, thus saving time also for the users. Taxumo collects the payment and service charge from users through DragonPay and PayPal. At this point, the service is still free but once the trial period is up, it will charge a minimal monthly fee for the service.
This early, founders of Taxumo are already eyeing the next step, which according to Arboleda is to offer expanded services such as audited financial statements for SMBs or maybe one-time tax payments like the annual property tax. The startup is also eyeing regional expansion in emerging countries within Southeast Asia.