How to Pay Taxes on Crypto Income in the Philippines: A 2024 Guide

Understanding Crypto Tax Obligations in the Philippines

The Philippines has emerged as a hotbed for cryptocurrency adoption, with over 7 million Filipinos now holding digital assets. As crypto trading, mining, and earning activities surge, the Bureau of Internal Revenue (BIR) has clarified that all crypto-derived income is taxable. According to BIR Revenue Memorandum Circular No. 102-2021, cryptocurrencies are classified as “property” subject to income tax, capital gains tax, and value-added tax (VAT). Failure to comply can result in penalties up to 25% of unpaid taxes plus 20% annual interest. This guide breaks down exactly how to legally report and pay taxes on your Philippine crypto earnings.

How Crypto Income is Taxed Under Philippine Law

The BIR treats cryptocurrency as a capital asset or inventory depending on your activity:

• Capital Gains Tax (CGT): Applies when selling crypto held as investment (15% on net gains above PHP 100,000)
• Regular Income Tax: For active traders and businesses (graduated rates from 0% to 35%)
• Withholding Tax: Required for crypto businesses paying employees/partners (1-15%)
• VAT: May apply to crypto exchange services at 12%

Tax residency determines liability: Filipino citizens and resident aliens pay taxes on global crypto income, while non-residents are taxed only on Philippine-sourced earnings.

Tax Treatment for Different Crypto Income Types

Trading Profits

Classified as:

• Capital gains if held long-term (taxed at 15% flat rate)
• Ordinary income if actively traded (added to annual taxable income)

Mining Rewards

Treated as ordinary income at fair market value when received. Miners must register as self-employed and pay 8% gross income tax or graduated rates.

Staking/Yield Farming

Rewards are taxable as ordinary income upon receipt. Record the PHP value at conversion date.

Airdrops & Forks

Taxable as “other income” at market value when you gain control of the coins.

NFT Sales

Subject to CGT if held as investment, or ordinary income for creators.

Step-by-Step Guide to Calculate and Report Crypto Taxes

1. Track All Transactions: Use tools like Koinly or Accointing to log buys/sells with timestamps and PHP values
2. Classify Income Type: Separate capital gains from business income
3. Compute Gains/Losses:
   Capital Gain = Selling Price – (Cost Basis + Fees)
   Business Income = Total Revenue – Allowable Deductions
4. File Required Forms:
   • BIR Form 1701 (Annual Income Tax Return)
   • BIR Form 1707 (Capital Gains Tax Return)
   • BIR Form 2551Q (Quarterly VAT Return, if applicable)

Deadline: April 15 annually for individuals. Quarterly payments required if earning business income.

5 Compliance Steps for Filipino Crypto Holders

1. Register with BIR as self-employed/professional if trading actively
2. Secure an Authority to Print receipts for taxable transactions
3. Maintain separate records for crypto and fiat transactions
4. Convert all crypto values to PHP using BSP exchange rates at transaction time
5. Keep documentation for 3 years including wallet addresses and exchange statements

Critical Mistakes to Avoid

• Ignoring small transactions: All earnings are taxable regardless of amount
• Mixing personal and business wallets: Creates accounting nightmares
• Forgetting hard forks/airdrops: These constitute taxable events
• Using USD values only: BIR requires PHP conversions
• Missing deadlines: Late filings incur 25% penalty + 20% annual interest

Frequently Asked Questions

Do I pay tax if I hold crypto without selling?

No tax applies until you dispose of crypto through selling, trading, or spending. Mere holding isn’t taxable.

How is crypto-to-crypto trading taxed?

Each trade is a taxable event. You must compute PHP gains when exchanging one coin for another.

Can I deduct crypto losses?

Capital losses offset capital gains. Business losses reduce taxable income. Unused losses carry forward for 3 years.

Is Binance/PDAX required to report my transactions?

Yes. Under BIR regulations, exchanges must report users earning over PHP 500,000 annually.

What if I can’t afford to pay my crypto taxes?

File returns on time anyway to avoid penalties. Contact BIR for installment options (Oplan Kandado).

Disclaimer: This article provides general information only. Consult a BIR-accredited tax practitioner for personalized advice regarding your crypto tax situation.