As unemployment in the Philippines get worse during the pandemic, more and more people are looking for ways to make a living. So when play-to-earn blockchain game Axie Infinity rose to popularity, it was only a matter of time before Filipinos got into it. According to a May report by Tech in Asia, the Philippines was the fastest-growing market in Southeast Asia in terms of mobile game downloads in 2020 with 16% coming from the country. Since users earn money, Department of Finance Undersecretary Antonette Tionko said that it should be taxable.
"Whoever earns currency from it, it’s income you should report it," Tionko told reporters as quoted in an Inquirer report.
The Department of Finance, along with the Securities and Exchange Commission, Bangko Sentral ng Pilipinas, and Bureau of Internal Revenue, has yet to finalize the mechanisms. This is especially since Axie Infinity developer Sky Mavis is a non-resident foreign corporation not registered in the Philippines, according to a report by the Bureau of Internal Revenue.
“That is one of the things that we hopefully capture once we have that system of registration for non-residents, those types of companies not in the Philippines,” Tionko added. Digital goods and services, including transactions through global online platforms, have yet to be taxable through the 12% value-added tax.
What is Axie Infinity?
Axie Infinity is a trading and battling game that lets you collect, breed, raise, battle, and trade "Axies," which are digitized as non-fungible tokens. Think of it as your virtual pet from Neopets or your Tamagochi pet; but since it's a non-fungible token, it's now a unit of data stored in a digital ledger (a.k.a. a blockchain) that certifies a digital asset to be one-of-a-kind.
How do you earn with Axie Infinity?
You need to have an Ethereum account, which uses the cryptocurrency Ether. You use this cryptocurrency to buy at least three Axies, which can go from 0.065 ETH and above. You should take care of these "pets" and make them strong enough to battle Axies or nice enough to be traded or sold in the virtual marketplace. In the process, you get more crypto "money" in your Ethereum account, which you can eventually convert to cash through platforms that offer cryptocurrency exchange.
"Cryptocurrency is an asset, so it’s already taxable in the Philippines. What kind of tax applies? Certainly, the gains are subject to income tax. But if you look at the nitty-gritty of it, a lot of it really basically will depend on its characterization, which I think is something for the SEC and the BSP to decide on. Is it a security? Is it a currency? So those are the things that will help us define the rules on how it should be taxed. But regardless of how it is characterized, it’s taxable—subject to income tax," Tionko explained.
This story originally appeared on Spot.ph.
* Minor edits have been made by the Candymag.com editors.
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