MANILA - Leah Tinoco used to run an online business selling plants and decorated pots to help her family pay the bills. But the frequent lockdowns imposed due to the pandemic made sustaining her business too difficult.
In June, she started playing the Axie Infinity game.
“Na-recommend lang ito sa amin ng aming close friends. Nung umpisa, medyo skeptical pa kaming aralin, dahil meron pa kaming ibang focus na ginagawa noong time na iyon,” Tinoco said.
(It was recommended to us by close friends. At first, we were a bit skeptical because we were focused on other things that time.)
But Tinoco was convinced after seeing her friends start to earn money, with even their family members also earning while playing Axie.
Tinoco wasn’t the only one convinced of Axie’s potential for income. The country’s main tax collection agency also saw Axie Infinity players as a possible source of revenues.
Axie Infinity reportedly exploded in popularity in the Philippines this year, with many Filipinos looking for alternative ways to earn after businesses were shut and jobs lost due to the pandemic.
Now, the government wants its share of that income.
Earlier this week, an official of the Bureau of Internal Revenue said players of the game are also covered by a BIR memorandum on income from online activities.
“At the end of the day may flow of income na pumasok sa ating players, so income din po ‘yan na pu-pwede pong maging taxable,” said BIR Deputy Commissioner Marissa Cabreros during Tuesday’s Laging Handa briefing.
(At the end of the day, there’s a flow of income to our players, so that is still income that can be taxable.)
PAY TO PLAY, PLAY TO EARN
Axie Infinity is an online game you can play online. it isn't available yet on the app stores of Apple or Google. you have to go to the company website to actually get the game. It was developed by a Vietnamese company called Sky Mavis, which has won the backing of big names like gaming company Ubisoft and cryptocurrency exchange Binance.
It’s a game that lets players earn cryptocurrencies, which can then be exchanged for real-world money like Philippine pesos or US dollars.
But before you can start playing, you first need to pay. Players need to get a team of 3 Pokemon-looking monsters called Axies that have various skills. Axie monsters can cost P30,000 for a team of 3, although the monsters are usually priced using the cryptocurrency Ethereum.
Floi Wycoco, a financial literacy coach, said he spent P80,000 to set up his Axie team.
Axie players earn tokens by accomplishing daily quests and by pitting their Axie monsters against other monster teams of real-life players.
Through these Axie battles, players earn cryptocurrency called Smooth Love Potion tokens or SLPs.
SLPs can be withdrawn from the game, transferred to e-wallets, and exchanged for either fiat money, or more established cryptocurrencies such as Ethereum.
As of today, SLPs are priced at $0.137499 each (P6.89) according to Binance.com.
Axie Infinity Monsters, are NFTs or non-fungible tokens, which also carry some value, and can be traded for cryptocurrencies or fiat money.
The most expensive Axie monster sold to date cost 300 Ethereum. With this cryptocurrency valued at over $3,000 as of August 26, or roughly P157,000 each, this means the Axie monster sold for over P45 million.
The game also has a governance token called AXS or Axie Infinity Shards, which is also a cryptocurrency.
AXS aren’t as easy to earn as SLPs, and are awarded only to top Axie Infinity Players. Like SLPs, AXS also can be exchanged for fiat money or more established cryptocurrencies.
An AXS is currently priced at $71 each or P3,558.80), based on Binance.com’s valuation.
The main difference between AXS and SLP is that SLPs are unlimited and can be earned on a daily basis by players, albeit with a daily cap.
Meanwhile, the total number of AXS out there is limited or hard capped, like stocks or Bitcoin.
If you’re interested to play but don’t have enough money to buy Axies, you can become a “scholar.”
Axie scholars are players who are paid by Axie monster team owners or managers to play and farm for SLPs. Axie team owners shoulder the cost of starting the game for scholars, including the purchase of three Axie monsters.
Wycoco’s team currently has 10 scholars.
IS IT LUCRATIVE?
If a player can farm 75 SLPs per day he/she will earn around 2,250 SLPs in a month. With one SLP currently valued at P6.89, this comes to around P15,502 for a month of playing.
At this rate, Wycoco said ‘scholars’ would still be exempt from paying income taxes, as the annual total for their earnings would be around P186,000, or still below the threshold for taxation.
“Sabi nga sa ating batas, you will only be taxed if only P250,000 and above ang kinikita per annum,” Wycoco said.
(Under the law, you will only be taxed if your earn P250,000 and above per annum.)
Tinoco meanwhile said her total earnings in 2 months have reached about P50,000, and another 2,000 in SLP holdings. She is holding on to the SLPs to either start her own Axie team, or for conversion at a later time when its value has increased.
CRYPTO VOLATILITY AND SCAMS
SLPs and AXSs, being cryptocurrencies, are volatile, as anyone familiar with Bitcoin knows.
According to Tinoco, if a person wants to start playing Axie Infinity but does not understand crypto and blockchain, they should stop and study up first.
“Matatalo ka lang dito unang una kung hindi mo alam ang pinapasok mo, hindi mo inaaral. Dapat aralin mo ang pinapasok mo. Humingi ng advice sa experto.
(You won’t get far if you don’t know what you’re getting into, if you don’t understand it. You should study and get advice from experts.)
Tinoco said SHE went into the game fully understanding cryptocurrency and blockchain, how these are not regulated, and are not accepted as payment for day-to-day needs like groceries.
She understands these need to be kept in virtual wallets, and also knows how to exchange her SLPs or AXS for fiat cash. She also knows there are fees incurred when she moves her SLPs and AXS from the game to her wallet and to the crypto exchanges.
The success of Axie Infinity has also attracted scammers and hackers. Wycoco said phishing is a common scam targeting Axie players.
“Maraming accounts now na naha-hack in playing Axie Infinity. You have to be really careful," said Wycoco.
Taxing Axie Infinity players will be a challenge for the government, according to Wycoco.
But Wycoco also said he is registering his Axie Infinity company, with his scholars, with the BIR.
“In the long run, kung magbabayad ka ng taxes, yes masakit ng konti. But [then] again, kahit saang country may tax eh,” he said.
(In the long run, if you’re paying taxes, yes it’s a bit painful. But then again, all countries have taxes.)