The Department of Finance in the Philippines has stated that players of the popular online game, Axie Infinity, known for its play-to-earn gaming model that allows users to earn money while playing the game, must pay income taxes.
Philippine’s Finance Undersecretary Antonette Tionko made the statement, clarifying that any profits made through play-to-earn games are subject to income tax. She stated, “Whoever earns currency from it, it’s income you should report it.”
While Antonette Tionko asserted that that play-to-earn gains “are subject to income tax,” she admitted that lawmakers are yet to classify whether Axie’s in-game NFTs or native tokens Smooth Love Potion (SLP) and Axie Infinity Shards (AXS) are deemed to be securities or currencies but she stated that the cryptocurrency earned in Axie Infinity were taxable, although the government is yet to put in place a mechanism to determine the amount and actually collect taxes from these digital assets.
She stated, “Cryptocurrency is an asset, so it’s already taxable in the Philippines. What kind of tax applies? Certainly, the gains are subject to income tax. But 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.”
Play-to-earn gaming exploded in popularity across the Philippines amid the pandemic. The surging price of crypto assets meant that locals could generate a decent income comparable to local wages by playing Axie Infinity. Both the SLP and AXS tokens are earned through playing Axie Infinity. SLP functions as an in-game currency while AXS is the governance token of the Axie community.
Antonette Tionko also highlighted that Sky Mavis, the Vietnamese game studio that developed Axie Infinity, is not registered with the Philippine Bureau of Revenue despite generating income from sources based within the Philippines. She stated, “That is one of the things that we hopefully capture once we have that system of registration for non-residents, those types of companies not in the Philippines.”
The Axie Infinity platform is growing and this can be seen through the revenue generated. According to Axie World, the platform has generated a total of approximately $309 million for the month of August. This is more than double what was generated last month.
The AXS token, which is the governance token is trading at approximately $69.52, down 4.22% while the in-game currency, the SLP, is currently trading at $0.1403, up 2.57% as of the time of this writing.