The Finance Undersecretary of the Philippines, Antonette C. Tiono, said that earnings from crypto and non-fungible token-based games like Axie Infinity are subject to income tax.
Philippines’ Finance Undersecretary Antonette C. Tiono has said that profits generated from online games should be subject to income tax. Local media outlet the Manila Bulletin reported the news, saying that Tiono revealed that the Department of Finance and Bureau of Internal Revenue (BIR) were examining Axie Infinity.
Tiono did say that it was uncertain whether the Axies, the name for the in-game pets, was a security. However, regardless of whether it is a security, she believes that it is subject to income tax. She also noted that Sky Mavis, the creator of Axie Infinity, has not registered with the BIR.
Referring to this registration and the fact that the company’s income came from Filipino sources, Tiono said,
“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. It’s not in the Philippines, but certainly whoever earns currency from it, you should report it.”
Tiono also hinted that other income streams would be subject to tax. So far, the Philippines has only taken limited steps to regulate the market.
To counter such problems, some governments are outright banning some assets, like NFTs. The Thai SEC, for example, banned NFTs and meme tokens. The Thai government has also targeted another profit-generating sector of the space, DeFi.
Axie Infinity players net huge profits
Axie Infinity has emerged as one of the most popular blockchain games in recent months. The AXS token has shot up in value, as has the general prices in the game itself. Some individuals have been making steady profits from it, which has drawn attention.
The game has proven popular in the Philippines and South Asia, where people eagerly breed and “fight” their Axies to earn rewards. Its popularity has risen to the point where its all-time trading volume crossed $1 billion — a remarkable feat for a non-payment-focused use case.
It’s possible that other governments will also crackdown on the NFT and gaming market. Players can indeed fetch a good sum from these games, and governments will not allow those earnings to go unregistered. Still, crypto enthusiasts will likely be happier with taxation than outright banning.