Axie infinity is an NFT-based online game inspired by the popular Pokemon game where users earn cryptocurrency tokens by breeding and battling with digital pets known as Axies, the tokens earned from playing can be exchanged for fiat.
Source: coinquora.com
The tokens are of two types - Axle Infinity Shards (AXS) and Small Love Portion (SLP). AXS can be sold on exchanges such as coinbase and can be bought with local currencies or exchanged with other cryptocurrencies. SLP is earned by simply spending time in the game, the amount of SLP earned is totally dependent on the time spent playing the game.
Axie infinity has gained popularity as a means to earn money ever since the Corona virus pandemic caused people to lose their jobs, with over 40% of it's users from the Philippine. These users make a lot of money from playing, ranging from hundreds to thousands of dollars. An anonymous Filipino player says he earns over $2000 monthly from playing for one hour everyday. However, Phillipines' regulators wants players to pay tax based on the income generated from playing. Philippine finance undersecretary- Antonette C. Tionko says that "cryptocurrency is a taxable asset in the Philippine therefore whoever earns from Axie infinity should report it".
Tionko says Axie infinity's income in the Philippines should be taxed, but Sky Mavis PTE. Ltd, being a vietnamese based company makes it difficult to do so. In lieu of this the BIR is developing a registration system for non-resident corporations so they can demand a disclosure of the company's earnings for payment of tax by Philippine's users earning from it.
A certain player of the Axie infinity game named "porky" says he has no issues with payment of tax from the games' income, and is ready to pay but the question is; "what is the taxation procedure?". "Will income be taxed when converted to fiat or taxed when profit is made?" He says the government should have an implemented law guiding this taxation process.
For now there is no official guideline that determines the taxing system and how much should be collected as tax based on these generated incomes. It is unclear whether Axie should be classified as a currency or security hence the Security Exchange Commission (SEC) and Bangko Sentral ng Pilipinas (BSP) are expected to look into this. "These are the things that will help us define the rules on how it should be taxed" Tionko says.
Filipinos users' thought on this?
Axie infinity users in the Philippines expressed their thoughts on this latest development.
The below statements are real responses received from some of my Filipino friends that are active users of Axie infinity on informing them of this memorandum. Their names have been kept anonymous for privacy purpose.
"Of course, I'm against it. They're only thinking about money since they're undoubtedly corrupt".
"It doesn't matter what your source of income. Tax is compulsory".
"I'm not against tax payment if it will be used in the right way. The lack of a source of income brought me to this game".
" I may not agree to this because Axie is crypto space not real life".
While some expressed dissatisfaction on this development, some are in support of the income tax proposal without. However the SEC and BSP are yet to look into the taxation procedure, which begs the question- "will it ever be passed into law?"
irrespective of whether you're an Axie infinity user or not, feel free to tell your thoughts on this latest development in the comment section.
"Disclaimer: this article is not meant to be a slanderous statement against the Filipino government but to educate the public on the latest development in the crypto space".