Philippines Want to Tax Axie Infinity Managers and Scholars

A report published by the Manila Bulletin states that tax authorities in the Philippines are beginning to consider taxing blockchain-based game companies as well as the income earned by users on such platforms, in light of the continued popularity of play-to-earn crypto games like Axie Infinity.

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Following the requirement that social media influencers pay their income taxes, the Bureau of Internal Revenue has stated that people who earn money from playing online games such as Axie Infinity must register with the government and pay their income taxes. According to Antonette C. Tionko, undersecretary of finance for the Philippines, earnings from these gaming platforms are subject to income tax, and users are required to report their earnings for taxation purposes. The Department of Finance and the Bureau of Internal Revenue are also examining the possibility of taxing Axie Infinity and other gaming platforms that are not registered in the Philippine government.

“Maraming nagsasabi: Naku BIR, bakit mo kami bubuwisan e naglalaro lang kami. Unfortunately, yung serbisyo ng pagalalaro, diyan ho kayo binabayaran ng income, kumikita kayo. At the end of the day may flow of income na pumasok sa ating players, so income din po ‘yan na pu-pwede pong maging taxable,” BIR Deputy Commissioner Marissa Cabreros said during Tuesday’s Laging Handa briefing.

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Axie Infinity is an online adventure game that is based on the Pokémon franchise and allows players to earn cryptocurrency tokens. To obtain electronic pets known as "Axies," players must first purchase NFTs, and then they can earn more tokens by breeding their advanced pets, fighting them, and trading their advanced pets' NFTs. The tokens that have been earned can be exchanged for real money.

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Developed by Sky Mavis in Vietnam, Axie Infinity is a non-resident foreign corporation in the Philippines. According to Tionko, Axie Infinity's income from the Philippines should be subject to local taxation, and the Bureau of Internal Revenue is considering a system of registration for non-resident corporations, which would allow the BIR to demand that such companies disclose their earnings and pay the appropriate taxes.

According to reports, the game's popularity has skyrocketed in recent months, with thousands of players in the Philippines attracted to the game's play-to-earn business model. Most of its users are based in the Philippines, and it is extremely popular among Filipinos of all ages, from teenagers to 75-year-old grandparents, not only as an entertainment medium, but also as an opportunity to earn a legitimate income that can potentially change their lives during this period of pandemic.

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In an interview with Forkast.News, one Axie Infinity player, who goes by the name of "Porky," stated that he is willing to pay taxes but does not know where to begin the process. According to him, "I have to pay taxes, but they [the government] could do a better job in terms of implementation and guidelines. Even now, there are some ambiguous areas.” In the case of Axie Infinity, for example, it is unclear whether earnings will be taxed only if the tokens are redeemed in pesos or whether all earnings from Axie will be taxed regardless of whether the tokens are redeemed in fiat currency, according to Porky.
 

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