• Axie Infinity and its players’ earnings are being taxed in the Philippines

  • According to a story in the Manila Bulletin, tax officials in the Philippines are looking into taxing blockchain-based game firms as well as the revenue received by gamers on such platforms, as play-to-earn crypto games like Axie Infinity continue to attract users.

    Earnings from online gaming platforms are subject to income tax, according to Philippines’ finance undersecretary Antonette C. Tionko, and users must disclose their earnings for taxation.

    Authorities are also considering levying taxes on online gaming sites. The Department of Finance and the Bureau of Internal Revenue, in particular, are looking into Axie Infinity, which is not registered in the Philippines, according to Tionko.

    Axie Infinity is an online adventure game that allows users to win crypto tokens and is inspired by Pokémon. By purchasing NFTs, players can purchase electronic pets known as “Axies,” and they can earn more tokens by breeding, fighting, and exchanging advanced pets’ NFTs. Tokens acquired can be exchanged for fiat money.

    The Securities and Exchange Commission and the Bangko Sentral ng Pilipinas, the country’s central bank, have yet to decide whether Axie is a currency or a security, according to Tionko. Although clarification on tax classification will benefit in determining how companies’ earnings are taxed, such platforms are taxed, according to Tionko.

    Sky Mavis, a Vietnamese studio, created Axie Infinity, which is a non-resident foreign entity in the Philippines. According to Tionko, Axie Infinity’s money earned in the Philippines should be taxed locally, and the BIR is considering establishing a mechanism for non-resident corporations to register so that it may demand that they declare earnings and pay taxes.

    The Philippines is Axie Infinity’s main market, with roughly 40% of its users based there. The Philippines, one of the fastest-growing Asian economies in 2019, had its progress interrupted by Covid-19 and long-term lockdowns, which pushed unemployment to 40% last year. As Filipinos struggled to make ends meet, Axie Infinity grew in popularity among Filipinos of all ages — from teenagers to 75-year-old grandparents – as a legitimate source of income that might potentially improve their life.

    Filipinos are now earning hundreds of thousands of dollars playing Axie Infinity, which enables them not only put food on the table and pay off debts, but also buy necessities such as medicines and attain life objectives such as purchasing property or a home. By putting in just an hour of play every day, one Filipino Axie Infinity player earns almost US$2,000 or 100,000 pesos each month, more than twice his typical monthly salary. Others earn roughly US$300 per month, nearly double the Philippines’ minimum income of US$170, and above-average players can earn up to US$20,000. The taxation might be a huge knock for players who primarily make money from Axie Infinity.

    While one Axie Infinity player, known as “Porky,” stated that he is eager to pay taxes, he does not know where to begin. “I have to pay taxes,” he continued, “but they [the government] should have better rules and implementation.” There are still some unanswered questions.” For example, Porky said it’s unclear whether Axie Infinity earnings will be taxed solely if the tokens are redeemed in pesos, or if all Axie earnings will be taxed regardless of whether they’re redeemed in fiat currency.

    What's your reaction?
    Happy0
    Lol0
    Wow0
    Wtf0
    Sad0
    Angry0
    Rip0