An official of the Bureau of Internal Revenue said that earnings from cryptocurrency-based games are also subject to value-added tax.
LOCAL players earning from cryptocurrency-based games like Axie Infinity must pay their income taxes, an official of the Department of Finance (DOF) said.
“That is one of the things that we hopefully capture once we have that system of registration for non-residents, those types of companies. It’s not in the Philippines, that company. But certainly whoever earns currency from it, it’s income; you should report it,” Finance Undersecretary Antonette Tionko told reporters Monday (August 23).
Tionko added that the DOF and the Bureau of Internal Revenue (BIR) have already looked into the company behind Axie Infinity, which they found is a non-resident foreign corporation that is also not registered in the Philippines. Vietnam-based Sky Mavis Pte. Ltd. developed Axie Infinity.
In the play-to-earn game Axie Infinity, players can earn cryptocurrency token “Smooth Love Potion,” which can be sold in exchange for cash.
The game has attracted many players from developing countries as it provides a new income stream, especially with the economic impacts from the Covid-19 pandemic.
While Tionko admitted that the Securities and Exchange Commission and the Bangko Sentral ng Pilipinas have yet to look deeper into the characterization of the cryptocurrency on whether it is a security or a currency, Tionko clarified that it is taxable.
“Cryptocurrency is an asset, so it’s already taxable in the Philippines. Now, what kind of tax applies? Well, certainly, the gains are subject to income tax,” she said.
Meanwhile, BIR Deputy Commissioner Arnel Guballa also said that earnings from cryptocurrency-based games are also subject to value-added tax (VAT).
Under Republic Act 10963, or the Tax Reform for Acceleration and Inclusion (Train) law, those with annual taxable income that does not exceed P250,000 are exempted from paying personal income tax.
Moreover, the Train law also provided that gross annual sales and/or receipts earned from the sale or lease of goods or properties or the performance of services not exceeding P3 million are also exempted from VAT.
However, Guballa said he personally believes that the P250,000 threshold on imposing income taxes on gaming revenues should be removed.
However, he admitted this move requires passing a law.
He also said the bureau will also be studying whether the taxes will be imposed upon earning the cryptocurrency token or upon exchanging it to cash.
Tags:, #Cryptocurrency, #incometax, #BureauOfInternalRevenue