Philippines - Crypto penetration

intro

The Philippines remains one of the most crypto-friendly countries in Southeast Asia, along with Taiwan, Japan, and South Korea. Unlike other countries in the region, such as Thailand and China, there is no ban on crypto payments. In January 2021, a new regulation for cryptocurrencies was adopted in the country.

Security level

The Philippines has a high danger security level according to our rating. Jurisdiction has 57.4 points (from 100) for safety level in Numbeo crime rating (1). Homicide level (2) is 4.3 per 100,000 inhabitants a year. Level of firearm-related death (3) 7.72 per 100,000 inhabitants a year.

Crypto Payments

According to local media, crypto payments in the country are legal (4). However, the BSP does not recognize Bitcoin and other “virtual currencies” as currency. It has been reported (5), that less than 2 percent of all known transactions in the Philippines are conducted using cryptocurrency but this does not account for transactions conducted in the informal economy.

Crypto Salaries

No regulation/No data.

Legal

The Philippines has a comprehensive crypto regulation framework that allows #cryptotocrypto and #cryptotofiat exchange.

The Bangko Sentral of Pilipinas (BSP) is the primary regulator that registers VASPs. Another regulator is the local SEC, which influences the regulation of crypto-related funds and securities. Also, there are two other kinds of crypto operations licenses:

Offshore Virtual Currency Exchange (OVCE) Principal License

OVCE Regular license

VASPs registered (6) in The Philippines need to get “Certificate of Authority” to operate as a Money Service Business. According to Notabene VASP also shall (7) adhere to the registration procedures under Appendix N-7 and submit the Application for Registration and Notarized Deeds of Undertaking (Appendices N-8 and N-9) to the Bangko Sentral through the appropriate supervising department of the Bangko Sentral.

Activity	Regulator	Licensed Entities	Note
#cryptotocrypto and #cryptotofiat	Bangko Sentral ng Pilipinas (BSP)	18	Operations inside the country
#cryptotocrypto and #cryptotofiat	Offshore Virtual Currency Exchange (OVCE) Principal License	24	Offshore exchange
#cryptotocrypto and #cryptotofiat	OVCE Regular license	13

Bangko Sentral ng Pilipinas has registered 18 crypto entities in the list of VASPs(8).

In late January (2022), the Union Bank of the Philippines announced plans to offer cryptocurrency trading and custodial services (9). The new investment and trading feature launched in collaboration with Swiss crypto technology firm Metaco, with UnionBank going live on Metaco’s (10) digital asset platform Harmonize.

Taxation

Grant Thornton's guide (11) states, “In the Philippines, however, the BIR has not yet issued specific guidelines on the classification of cryptocurrencies and the taxation of income earned from such."

According to local tax expert Gerard Caprizo's video tutorial (12), crypto gains (like professional trading) in the Philippines are subject to PIT from 20% to 35%.

At the same time, according to Grand Thornton, those considered non-resident aliens not engaged in trade or business (NRANETBs) in the Philippines whose income is subject to 25% income tax based on gross income.

Tax name	Index
PIT tax Min	25
PIT tax Max	35
Corporate tax (CIT)	25
Min Individual CGT (for crypto)	15
Max Individual CGT (for crypto)	15
Wealth tax Min	1
Wealth tax Max	3

PIT

The headline PIT rate is 35%(12¹).

CIT

Max CIT is 25% according to PWС tax summaries (13). Also PWC has a special crypto tax guide (14) for Phillipines according to it “if the entity holds cryptocurrency for investment purposes (capital appreciation) over extended periods, it will not likely meet the definition of inventory, but that of an intangible asset”. Probably this means that the corporate CGT rate will be applied.

CGT

Net capital gains derived(15) by domestic and foreign corporations from the sale, exchange, transfer, or similar transactions of Philippine shares of stock not traded through a local stock exchange are taxed at a flat 15% rate.

Also, according to Grant Thornton (16), there are two crucial facts in essential tax legislation in this country:

“only 50% of the capital gain earned by an individual will be included in the gross income if the asset was held for more than 12 months...

gains arising from ordinary assets are treated as ordinary income and are generally reportable in full regardless of the holding period.

Links

1)Crime Index by Country 2023 Mid-Year

2)List of countries by intentional homicide rate

3)List of countries by firearm-related death rate

4 and 5)The Diplomat. How Terrorists Use Cryptocurrency in Southeast Asia. Article

6)CIRCULAR NO. 1108. PDF-file

7) Nota Bene. Crypto Travel Rule Regulations in the Philippines by the Central Bank of the Philippines. Article

8)List of Virtual Asset Service Providers (VASP). As of 31 July 2023. Source: TRISD Database. PDF-file

9)Bloomberg. Crypto Enthusiasm Prompts Philippine Bank to Launch Trading. Article