DOF: Earnings of Axie Infinity are taxable

The Department of Finance (DOF) stated that earnings from online play-to-earn games like Axie Infinity are taxable.

Finance Undersecretary Antonette C. Tiono noted that gains from these gaming platforms are subject to income tax, notwithstanding the massive surge in popularity of online multiplayer video games that also allow gamers to make money.

Tionko revealed that the Department of Justice (DOJ) and the Bureau of Internal Revenue (BIR) are investigating Axie Infinity, a Vietnamese firm Sky Mavis adventure online game.

Players can earn in-game cryptocurrency that can subsequently be traded and swapped for pesos in Axie Infinity, a blockchain game whose popularity exploded in the country during the outbreak.

However, to play the game, users must first purchase three digital creatures known as “Axis,” which they will breed to create avatars who will fly on the battlefield. The rewards for completing the combat are cryptocurrency.

Tionko did confess, however, that the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas are still debating whether “Axie” is a currency or security (BSP).

“But it’s taxable, subject to income tax, regardless of how it’s described,” said Tionko, who heads the DOF’s Revenue Operations Group.

An “Axie” used to cost only P250, but due to the virtual game’s rapid surge in popularity, its price has risen to around P33,000 per digital pet.

Tionko further disclosed that Axie Infinity’s creator is not registered with the BIR.

Even though Sky Mavis is a non-resident foreign entity established in Vietnam, she claims that the company’s income obtained from sources in the Philippines should be taxed locally.

“It isn’t registered in the Philippines,” says the author. That is one of the things we expect to capture once we have the non-resident registration system in place. Although it is not in the Philippines, anyone who earns money from it should report it, according to Tionko.

In the meantime, Tionko reminded the public that all online money-making schemes that have swept the digital world in recent months are liable to income tax.

“Keep in mind that taxation is a flow of wealth,” she advised.

Source: ManilaBulletin

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