The Philippine government intends to clarify the taxation of cryptocurrencies by 2024 as part of an infrastructure bill.
The Philippine Department of Finance has presented President Ferdinand Marcos Jr. and his administration with a budget consolidation and resource mobilisation plan for the country. It aims to pay off 3.2 trillion Philippine pesos (about $61.2 billion) in public debt incurred because of the pandemic. The department estimated that the country would raise an average of PhP284 billion ($5.4 billion) annually if the submitted plan is implemented.
Philippine Finance Minister Carlos Dominguez III has proposed clarifications to the tax regime for various sectors of the economy. These included taxes on carbon emissions, digital services and cryptocurrency transactions. It was also proposed to postpone the personal income tax reduction and VAT exemption. Dominguez stressed that there is still a lot of work to be done, but by 2024, after government approval, the necessary amendments will be implemented. There is currently no tax base relating to digital currencies – assets are only subject to capital gains tax when they are sold.
In addition, the government has started to focus on Play-to-Earn (P2E) gaming. A directive from the Internal Revenue Service of the Philippines states that users must report their earnings from games such as Axie Infinity. The P2E industry has not gone unnoticed by the Anti-Money Laundering Commission (AMLC) of the Philippines and the Securities and Exchange Commission (SEC) of the Philippines. The SEC had earlier urged banks and financial institutions to watch out for suspicious transactions that may be linked to Axie Infinity and similar games through which traders can make money.
Despite the fears of local regulators, digital currencies are in high demand in the Philippines. Last week, one of the country’s largest banks, UnionBank, launched blockchain-based digital bonds.