The Philippine government has yet to decide whether Axie’s in-game NFTs are securities or cash.
The local Department of Finance has made it obvious that it wants a piece of earnings generated by playing Axie and other play-to-earn games, despite the game’s huge success in the Philippines.
According to an Inquirer report from August 23, Philippine Finance Undersecretary Antonette Tionko clarified that any gains earned through play-to-earn games are taxable.
“Cryptocurrency is an asset, so it’s already taxable in the Philippines […] whoever earns currency from it, it’s income you should report it,” she said.
While the official stated that play-to-earn earnings are “taxable,” Tionko admitted that lawmakers have yet to determine whether Axie’s in-game NFTs or native tokens Smooth Love Potion (SLP) and Axie Infinity Shards (AXS) are securities or currencies.
She went on to say that the local central bank and the Securities and Exchange Commission should decide on the matter:
“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.”
While both the SLP and AXS tokens are gained by playing Axie Infinity, SLP serves as an in-game currency, whereas AXS serves as the Axie community’s governance token.
During the epidemic, play-to-earn games soared in popularity across the Philippines, with the rising price of crypto assets implying that locals might earn a reasonable living by playing Axie Infinity.
Tionko also pointed out that Sky Mavis, the Vietnamese gaming company behind Axie Infinity, is not registered with the Philippine Bureau of Revenue, despite earning money from domestic sources.
“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.”
The revelation caused a sell-off in SLP markets, with the token falling as much as 15% on August 24 before completing the day with a nearly 7% loss.
According to CoinGecko, SLP has had a rollercoaster ride in recent months, unexpectedly rocketing by more than 900 percent from $0.035 on April 26 to a record high of above $0.36 on May 2.
Since then, SLP has fluctuated wildly between $0.13 and $0.35, with the markets being down 60% from their July high.