Are Axie Infinity Earnings Taxable? Here's What You Need to Know

The play-to-earn game is gaining momentum in the Philippines.
by Christa De La Cruz for Spot.ph   |  Aug 25, 2021
Image: Axie Infinity
Share This!

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.

ADVERTISEMENT - CONTINUE READING BELOW

“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.

CONTINUE READING BELOW
Featured Video

Also read: 10 NFTs That Sold for Hundreds of Thousands of Dollars

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.

ADVERTISEMENT - CONTINUE READING BELOW

"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.

READ MORE:

The Positive vs Negative Effects of Video Games on Your Brain

I Tried to Invest in Crypto-Here's What I Learned

What Is Axie Infinity, the NFT Game That Lets You Earn as You Play?

These Students Invested in Cryptocurrency, Here's What It's Like

Hey, Spotters! Check us out on Viber to join our Community and subscribe to our Chatbot.

ADVERTISEMENT - CONTINUE READING BELOW

This story originally appeared on Spot.ph.

* Minor edits have been made by the Candymag.com editors.

#WATCHCANDY: Subscribe to Candy Magazine on YouTube and follow @candymagdotcom on Tiktok for guides to college life and beyond.

Candy is now on Quento! Click here to download the app and enjoy more articles and videos from Candy and your favorite websites!

REAX!
How do you feel about this article?
About the author
Christa De La Cruz for Spot.ph
VIEW OTHER ARTICLES FROM Christa
How do you feel?
Click on your mood to read related stories
The Latest
The couple also talked about what it's like to work together for the first time.
These content creators have skillfully incorporated a corset top into the cutest, most laid-back 'fits!
ICYDK, Donny and Belle are dubbed the "new-gen phenomenal love team!"
CONNECT WITH US