Axie Infinity’s continuous success has prompted Philippine authorities to ask if players must pay income tax on their earnings in the game.
Axie Infinity Player Revenue Soars as Income Tax Questions Mount
As the play-to-earn model has come to salience around the world, blockchain-powered games such as Axie Infinity have been able to capitalize on the demand for such products by offering players exactly what they hoped for – a way to exchange their gaming time for a real-world reward.
Axie Infinity, which is one of the biggest earners, has become very popular in the Philippines, where unconfirmed reports claim dozens of people have become millionaires out of playing the game. At the very least, many have found it more worthwhile playing Axie than going to work.
Whether this is true is still subject to speculation, but if anything, Axie Infinity has confirmedly generated over $207 million in revenue for the month of July alone. Now, the Philippine Department of Finance is stepping in and looking for a slice of the profits.
Based on a report by Inquirer on Monday, the Philippine finance undersecretary, Antonette Tionko, has insisted that the tax regiment for play-to-earn games should be changed so that windfall resulting from gaming is subject to income tax.
According to Tionko, this would be no different than taxing any other type of cryptocurrency in the country, as digital assets are already taxable in the Philippines. Nevertheless, there seems to be a lack of clarity whether Axie Infinity’s native tokens, to name the Axie Infinity Shards (AXS) and Smooth Love Potion (SLP), as well as the game’s NFTs, constitute a currency or a security.
Some Clarity Needed in Regulating Axie Infinity, to Begin With
Tionko insisted for the country’s Securities and Exchange Commission, as well as the central bank to get involved in helping establish whether Axie Infinity is taxable and under what specific regiment.
From a technical standpoint, the difference is that the AXS is the governance token, whereas the SLP is used as an in-game currency. However, many locals have been generating a high income from farming these assets and selling them from profit, often outstripping local wages.
A potential pitfall for Axie Infinity could be the fact that the developer, Vietnamese gaming developer Sky Mavis, is not registered with the Philippine Bureau of Revenue, even though the company is generating profit within the country.
There are still many unknowns about Axie Infinity’s tax future in the Philippines but all logic seems to point to the government stepping in to regulate these games.