The Department of Finance said those earning from playing online play-to-earn games, such as Axie Infinity, must pay tax.
According to Finance Undersecretary Antonette C. Tiono, earnings from gaming platforms are taxable.
She added DOF and the Bureau of Internal Revenue (BIR) are looking into Axie Infinity, an adventure online game developed by Vietnamese studio Sky Mavis.
Axie Infinity is a trading and battling game that allows players to collect, breed, raise, battle, and trade creatures known as “axies” (characters based on axolotl), which are digitized as NFTs. New players need to have at least three axies to play.
Completing the battles would yield rewards in the form of cryptocurrencies.
However, Tionko said Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP) have yet to resolve the “characterization” regarding whether “Axie” is a currency or security.
“But regardless of how it is characterized, it’s taxable, subject to income tax,” said Tionko, head of the DOF’s Revenue Operations Group.
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Axie Infinity players must pay tax – DOF
Before it became popular, an “Axie” cost only around P250. But its price spiked to roughly P33,000 per digital pet when it became widely known.
Tionko also revealed that the creator of Axie Infinity is not registered with the BIR.
“It is not registered in the Philippines. That is one of the things that we hopefully capture once we have that system of registration for non-residents. It’s not in the Philippines, but certainly, whoever earns currency from it, you should report it,” Tionko said.
Tionko also reminded the public that earnings from all online money-making platforms are subject to income tax.
“Remember the principle of taxation, it’s a flow of wealth,” she said.
According to the Cryptoday newsletter on Substack, the average player can earn around 4,500 SLP a month as of July. At today’s prices, that’s around $1,500. Axie says there are more than 250,000 daily active players.
Protocol revenue on Axie Infinity yielded $305 million over the last 30 days in July/August 2021.