On Tuesday, the Bureau of Internal Revenue (BIR) declared that earnings from playing online games like Axie Infinity would be taxed. idea is not very popular with Axie players. Now the community has started asking questions like: Can I be required to register as an Axie player and pay taxes? What if I don’t let them know that I play Axie? How do I know how much tax I will pay on my earnings?

Let’s explore these questions and the possible answer based on legality and facts.

So what are the legalities behind it?

First the National Internal Revenue Code 1997 (RA 8424) Section 23 Paragraphs A and F indicate that:

(A) a citizen of the Philippines residing there subject to tax on all income derived from sources within and outside the Philippines;

(F) To foreign corporation, whether or not it is engaged in trade or business in the Philippines, only income derived from sources within the Philippines.

se provisions tell us that in the Philippines all “income” received is taxable, regardless of the source. Now let’s start answering the questions.

Can I be required to register with the BIR as a player and pay taxes?

Yes. During the PTV News interview with BIR spokesperson Atty. He reminded people of Marissa Cabreros about Income Memorandum Circular (RMC) No. 97-2021 which clarifies the taxation of any income received by influencers on social media, including other forms of services done online. According to her, this includes players of online games like Axie Infinity. spokesperson also warned disobedient people to whom they would be subjected. penalties for late registration, late filing and late payment of taxes. In the worst case, the BIR can bring a criminal case against individuals for non-compliance. Criminal cases can be illicit business, failure to issue an official receipt, or tax evasion, which can result in fines and imprisonment under the Tax Code.

Source: https://www.facebook.com/PTVph/videos/1227152521134839/

During that same interview, the spokesperson also mentioned that people and corporations in any form in the digital area who post and broadcast live on social media platforms could easily be tracked by the BIR. However, as for Axie Infinity players, this will be a challenge. Basically expect reports of what you earn playing the converted game from SLP to Weight.

Sky mavis, the Vietnamese studio created by Axie Infinity, is a foreign corporation and is not registered with BIR. That is why BIR plans to create a new tax registration system for foreign companies (source: https://business.inquirer.net/329491/dof-axie-infinity-players-must-pay-income-tax-from- trading-pets-2). This will be another challenge for the BIR, as Sky Mavis does not make a penny from its players and the Treasury does not belong entirely to Sky Mavis. It belongs to the community. Why? Because balances will be rewards for players and stakeholders when community engagement launches later this year. Also, ETH and AXS have all of its assets. Sky Mavis cannot convert these two currencies into one reliable currency.

Now the follow-up questions will be:

How would you know if I earn income from the game?

Far away, the BIR has no way of tracking “Silent Players”, as the spokesperson said, live online broadcasts and other people advertising themselves as players would be easily caught.

So what if I hide and stay quiet about being an Axie gamer making money gambling? Can you use “AMLA” to investigate my bank?

Today, we cannot know to what extent the BIR can investigate to identify whether a person receives income from Axie Infinity or other online games to win. Remember you cannot be forced if you are “unidentified” as a player who receives income from the game.

AMLA or the Money Laundering Act of 2001 investigates money laundering and other financial crimes to protect financial institutions and deter criminals from turning the Philippines into a money laundering site for criminal proceeds. However, citizens are protected by the Bank Secrecy Act or RA 1405 (https://lawphil.net/statutes/repacts/ra1955/ra_1405_1955.html), which prohibits the disclosure of all deposits of any kind in banks or institutions banking in the Philippines, including investments in bonds issued by the Government of the Philippines, its political subdivisions and its tools with respect to those considered to be of an absolutely confidential nature; can not be examined, questioned or any person, government official, office or office examined, except later written permission of the depositor, or in cases of imputation, or by order of a competent court in cases of bribery or withdrawal of public officials, or in cases where the money deposited or invested is the subject of litigation. (Sec. 2, RA 1405).

An important reminder will be: since then we cannot avoid taxes (tax evasion) we cannot say what the future holds. Let’s say that if 10 or 20 years from now, and the BIR already has a way of identifying the players who win by playing to win, no matter how long they have been winning the game, those players will still be subject to cases of crimes such as Evasion of taxes (https://lawphil.net/statutes/repacts/ra1992/ra_7642_1992.html). Why? “It’s because the point of having tax evasion cases is the point of discovery, not the point of commission. It was then that the BIR found out, not when you did. (Attorney Mike David, during a live discussion on crypto taxes on Taxumo’s Facebook page: https://fb.watch/7BKVZMNtsh/)

Because if I want to pay my taxes, how do I know how much it would cost me?

Section 5 of the Tax Reform for Acceleration and Inclusion Act or TREN (Section 24 of the amended NIRC) provides the derived tax rate for each taxable year.

Source: https://www.bir.gov.ph/images/bir_files/internal_communications_1/TRAIN%20matters/RA-10963-RRD.pdf

People with annual income less than 250 250,000 (20. 20,833 per month) will be tax free. If you earn more than 250 250,000 but not more than 400 400,000 (20. 20,833 – 33 33,333 per month), you will have to pay taxes. 20% of the excess over ₱ 250,000.

Now let’s say you earned £ 30,000 per month from Axie Infinity, £ 1,833.4 of it will go to taxes. We break down the values. ₱ 30,000 – ₱ 20,833 = ₱ 9,167. £ 9,167 is the excess over tax-free income. Now we have 20% of $ 9,167 to get $ 1,833.4 belonging to the tax.

If you earn more than .000 400,000 (.3 33,333 per month) but not more than 800 800,000 (66 66,000 per month), you will pay 30 30,000 plus 25% of the excess over 400 400,000. Let’s say you make £ 40,000 a month with Axie Infinity – £ 4,166 will go towards your taxes.

se are just examples. If you want to calculate your annual / monthly income tax, see the tax rate provided by Sec. 5 of the TREN Law.

Unfortunately, ignorance of the law does not excuse anyone from non-compliance, so it is good that we remember these existing laws.

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