Regulatory bodies in the Philippines are looking into the popular game Axie Infinity, the blockchain game that has seen a meteoric rise across the globe, particularly in the Philippines. An official The Local Department of Finance recently said that earnings made from Axie Infinity will be subject to income tax.
The Finance Undersecretary of the Phillippines, Antonette C. Tiono revealed this week that users of blockchain-based games such as Axie Infinity would be subject to income tax if they generate profits.
In a statement reported by Inquirer , Tionko noted that the specific characterization of Axie is still as yet unclear.
“[…]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. 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,”
What this will mean for players of Axie Infinity in the Philippines, who make up over 60% of the games user base, is that the gains made from the gain will now be taxable in line with existing cryptocurrency taxation requirements. Many players in the space have been able to earn extraordinary amounts from playing the game, which allows its half a million daily players to earn an income through NFT pets which can be sold for cryptocurrencies.
In January the government introduced new regulations for cryptocurrency in the phillipines, aimed at safeguarding against money laundering. The nation currently has the third highest cryptocurrency use in the world, and institutional adoption as well as retail adoption has been high.
Philippine Assets and Digital Exchange (PDAX) CEO and Founder Nichel Gaba commented on this phenomenon:
“We are living in interesting times in crypto. Between December 2020 to today, something happened to put bitcoin and crypto into a space where even traditional portfolio managers need to consider them.”
Play-to-earn games have exploded in popularity in the blockchain space, taking off in the Philippines during the pandemic where people found an alternative way of earning an income at a time when the country was particularly hard hit by the restrictions. Nonetheless, as with other cryptocurrencies and securities, users of this game will now have to consider the tax responsibilities that now come with playing this game – adding an entirely new element to game playing.