Philippines: Ministry of Finance proposes to clarify digital currency taxation rules by 2024
Filipinos may soon get clarification on digital currency tax reporting requirements. The Philippines Department of Finance (DOF) has submitted a fiscal consolidation and resource mobilization plan to the new administration of Ferdinand Marcos Jr. and his economic team.
Among other areas, the DOF, which is the executive department of the Philippines in charge of tax policies, is proposing to “clarify the tax treatment of cryptocurrency transactions.”
The ministry says the details of its plans have yet to be decided. But with the government’s blessing, it intends to have the tax clarity proposals fully implemented by 2024.
The broader plan targets the country’s PHP 3.2 trillion ($61.2 billion) COVID-related debt. The department estimates that their recommendations will bring in an average of PHP 284 billion ($5.4 billion) each year.
DOF says the government needs to raise at least 249 billion pesos a year for the next 10 years to avoid having to borrow to pay the country’s 3.2 trillion pesos of additional debt. DOF says their proposals are expected to bring in an average of 284 billion pesos each year. pic.twitter.com/urggXb3lhe
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Speaking at the press conference where the plan was handed over, Finance Secretary Carlos Dominguez III said the proposed measures were urgently needed.
“We are optimistic that the new administration and our next group of lawmakers will recognize the importance and urgency of these measures and implement them as soon as possible,” he said.
The proposal also recommends clarifying the tax treatment of other sectors, including carbon taxes and digital services, as well as postponing the TRAIN personal income tax cut and removing tax exemptions. VAT.
Current tax treatment of digital currencies in the Philippines
Currently, a defined framework for the taxation of digital currencies has not been established in the country, according to Taxumo, a Philippine tax guide tool. Assets are taxed as capital gains only at the time of sale.
However, the government has observed other sectors of the market, such as the gambling to win sector, which is currently not taxed at all. In a directive, the Bureau of Internal Revenue (BIR) told investors that they must report their income from games such as Axie Infinity.
The gambling-to-win industry has also caught the eye 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 beware of suspicious transactions by Axie Infinity and other Web3 play-to-earn games.
Despite regulatory concerns, the adoption of digital currency continues to increase. UnionBank, one of the largest universal banks in the country, recently launched the first blockchain-backed digital bond offering.
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