Filipinos may soon get clarity on digital currency tax reporting requirements. The Philippines Department of Finance (DOF) has submitted a fiscal consolidation and resource mobilization plan to the incoming administration of Ferdinand Marcos Jr. and his economic team.
Among other areas, the DOF, which is the Philippines executive department in charge of fiscal policies, proposes to “clarify the tax treatment of cryptocurrency transactions.”
The department says the details of its plans are yet to be decided. But with the government’s blessings, it intends to have fully implemented the tax clarity proposals by 2024.
The broader plan is aimed at the country’s PHP 3.2 trillion (US$ 61.2 billion) COVID-related debt. The department estimates that their recommendations will yield an average of PHP 284 billion (US$5.4 billion) every year.
DOF says that gov't needs to raise at least P249 billion/year for the next 10 yrs to prevent having to use borrowings to pay the country’s P3.2 trillion in incremental debt. DOF says their proposals are estimated to yield an average of P284 billion every year. pic.twitter.com/urggXb3lhe
— Ralf Rivas (@RalfRivas) May 25, 2022
While speaking at the press briefing where the plan was handed over, finance secretary Carlos Dominguez III said that the measures proposed are urgently needed.
“We are optimistic that the incoming administration and our next set of legislators will recognize the importance and urgency of these measures and implement them at the soonest time possible,” he said.
The proposal also recommends clarifying the tax treatment of other sectors, including carbon taxes and digital services, as well as the deferment of TRAIN personal income tax reduction and removing VAT exemptions.
Current tax treatment of digital currencies in the Philippines
At present, a definite framework for taxing digital currencies has not been established in the country, according to Taxumo, a Filipino tax guide tool. The assets are only taxed as capital gains when sold.
However, the government has been eyeing other market areas, such as the play-to-earn sector, which is currently not taxed at all. In a directive, the Bureau of Internal Revenue (BIR) told investors that they are to report their earnings from games such as Axie Infinity.
The play-to-earn sector has also caught the attention of the country’s anti-money laundering watchdog and its Securities and Exchange Commission (SEC). Last month, the Anti-Money Laundering Commission (AMLC) issued a notice to banks to watch out for suspicious transactions from Axie Infinity and other web3 play-to-earn games.
Despite the regulatory concerns, digital currency adoption continues to increase. UnionBank, one of the country’s biggest universal banks, recently launched the first blockchain-backed digital bond offering.
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