The Philippines’ Department of Finance (DOF) has issued a notice requiring people who earn profits through games like Axie Infinity to be taxed, even if they’re cryptocurrencies or non-fungible tokens (NFTs). According to the Inquirer, these earnings must be taxed as incomes.
“Whoever earns currency from it, it’s income you should report it. (…) 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,” Antonette Tionko, Finance Undersecretary, noted. Regardless of the kind of money earned through these play-to-earn games, the authority pointed out that these transactions are taxable under the country’s law.
“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 [Securities and Exchange Commission] and the BSP [Bangko Sentral ng Pilipinas] to decide on,” she commented, by also adding that although there is an ongoing discussion on whether cryptos should be considered as currencies or securities, “certainly the gains are subject to income tax.”
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Crypto Incomes Taxation
However, she clarified that buying tokens to play such games won’t be taxable under the rulings. “Remember the principle of taxation: it’s a flow of wealth. So buying isn’t a flow of wealth. Maybe it’s taxable to them if you bought it at a discount, but then it’s getting into the nitty-gritty of it,” Tionko stated.
The country has not been quite active recently in crypto regulations, although their central bank has been showing some interest in the industry. In fact, in 2019, the Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, was doubtful to launch its own digital currency and stated that it would continue to monitor digital currencies closely. Early that year, the central bank released a regulatory framework to oversee the market activities relating to virtual currencies.