Should Pinoy Axie Infinity players be worried?
Crypto powered game, Axie Infinity has seen a massive surge in popularity across the globe in recent times. The Pokémon-inspired game, where anyone can earn tokens through skilled gameplay and contributions to the ecosystem, is extremely popular in the Philippines. And while Axie infinity has recently claimed over $1 billion worth in transactions, the Philippine Bureau of Revenue is looking to get their piece of the pie too.
Is there reason for concern?
In an August 23 report from Philippine news outlet Inquirer, the Philippine Finance Undersecretary Antonette Tionko is quoted as clarifying that profits made from play-to-earn games, like Axie. are to be taxed as income.
The government official said:
“Cryptocurrency is an asset, so it’s already taxable in the Philippines […] whoever earns currency from it, it’s income you should report it.”
Although Tionko said that play-to-earn gains “are subject to income tax,” she admitted that the country’s lawmakers still have to decide on what Axie’s in-game NFTs or native tokens Smooth Love Potion (SLP) and Axie Infinity Shards (AXS) really are.
Are they securities or are they currencies?
Next, she said that this decision should be made by the Philippine central bank, Bangko Central, and the Securities and Exchange Commission:
“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.”
Both SLP and AXS tokens are earned through playing Axie Infinity. While SLP functions as an in-game currency, AXS is the governance token of the Axie community.
The news immediately hit the SLP markets. The token crashed with almost 15% before ending the day at a 7% loss. It is currently trading at around $0.14 or PHP7
Tionko also pointed out that the Vietnamese game studio behind Axie Infinity, Sky Mavis, is not registered with the Philippine Bureau of Revenue. With the developers generating income from within the Philippines, this might become a threat for the game and its Pinoy community. Although she did not quite go that direction yet and diplomatically 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.”
Amidst the recent pandemic, Axie Infinity exploded in popularity among Filipinos, both in the Philippines and abroad. With the crypto bull-market well underway, the game is by many considered an opportunity to generate a decent income.
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Author: Peter Siu