INCOME DERIVED from trading and investing in cryptocurrencies and from playing non-fungible token (NFT) games like Axie Infinity are subject to tax, according to a senior official from the Department of Finance (DoF).
DoF Undersecretary and the head of its Revenue Operations Group Antonette C. Tionko said gains from cryptocurrency are subject to tax, including earnings from playing the popular NFT-based game Axie Infinity.
“If you look at the nitty gritty of it, a lot of it 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 [or] 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, [cryptocurrency] is subject to income tax,” Ms. Tionko told reporters last week.
For earnings generated from Axie Infinity, she said taxpayers should also report these and pay the applicable tax, even as it appears that the digital asset’s compensation is in kind.
“Apparently, it’s a non-resident foreign corporation. 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, those types of companies,” she added.
Axie Infinity is a “play-to-earn” game where players collect rewards that can be used for transactions.
However, Ms. Tionko said buying tokens in the game is not taxable and only the income derived from it.
The Bureau of Internal Revenue (BIR) started clamping down on the country’s digital economy as online platforms gained traction during the coronavirus pandemic.
Last week, the BIR issued Revenue Memorandum Circular (RMC) No. 97-2021 reminding social media influencers to register with the bureau and pay their taxes. The bureau also laid out guidelines that influencers can use in determining which of their earnings are taxable.
Meanwhile, in June last year, the BIR issued RMC 60-2020 asking online businesses to register with the bureau and settle their taxes. — B.M. Laforga