Pay Taxes on Staking Rewards in Philippines: Your Complete 2024 Guide

Understanding Tax Obligations for Crypto Staking in the Philippines

As cryptocurrency adoption surges in the Philippines, staking has become a popular way for investors to earn passive income. However, many Filipinos remain unaware that staking rewards are subject to taxation. The Bureau of Internal Revenue (BIR) classifies these earnings as taxable income, and failure to comply can lead to penalties. This guide breaks down everything you need to know about paying taxes on staking rewards while navigating the Philippines’ evolving crypto regulations.

What Are Staking Rewards in Cryptocurrency?

Staking involves locking your crypto assets in a blockchain network to support its operations (like transaction validation) in exchange for rewards. Unlike mining, staking doesn’t require specialized hardware—just holding compatible coins. Popular stakable cryptocurrencies in the Philippines include:

• Ethereum (ETH) after its transition to Proof-of-Stake
• Cardano (ADA)
• Solana (SOL)
• Polkadot (DOT)

Rewards are typically distributed periodically based on your staked amount and network rules. These earnings constitute additional income under Philippine tax law.

BIR Guidelines: How Staking Rewards Are Taxed

The Bureau of Internal Revenue clarified through Revenue Memorandum Circular (RMC) No. 55-2013 that cryptocurrencies are treated as taxable property. Key tax principles:

• Income Tax: Rewards are taxed as ordinary income at receipt, valued in Philippine Pesos (PHP) at fair market rate
• Withholding Tax: Exchanges/platforms may withhold 15% if registered as Philippine operators
• Documentation: You must maintain records of dates, PHP values, and transaction IDs

Tax rates range from 0% to 35% based on your annual income bracket under the TRAIN Law. Business entities pay a flat 25% corporate income tax.

Step-by-Step: Calculating Your Tax Liability

1. Identify Reward Dates: Note exact dates you received each staking payout
2. Convert to PHP: Use BSP or Binance PHP rates at time of receipt (e.g., 1 ADA = ₱25 on Jan 15)
3. Sum Annual Earnings: Total all PHP-converted rewards for the tax year
4. Apply Tax Rate: Include amount in gross income on BIR Form 1701/1701A

Example: Maria earned 0.5 ETH monthly in 2023. At average ₱100,000/ETH, her ₱600,000 rewards would fall in the 30% tax bracket, owing ₱180,000 minus applicable deductions.

Reporting Staking Income to the BIR

Follow this process when filing taxes:

• Use BIR Form 1701 for self-employed/sole proprietors or 1700 for purely compensation earners
• Declare rewards under “Other Income” in the gross income section
• Attach Schedule 10.1 detailing each reward’s date, amount, and PHP value
• File electronically via eBIRForms by April 15 annually

Keep digital/physical records for 3 years, including wallet addresses and exchange statements.

Penalties for Non-Compliance

Failure to report staking income risks severe consequences:

• 25% surcharge on unpaid taxes
• 20% annual interest on deficiencies
• Tax evasion charges under NIRC Section 254 (punishable by imprisonment)
• Audit investigations (BIR has tracked crypto transactions since 2019)

Smart Tax Strategies for Filipino Crypto Investors

• Use Tax Software: Tools like Koinly or Accointing automate PHP conversions
• Offset Losses: Capital losses from crypto sales can reduce taxable staking income
• Document Everything: Save screenshots of reward histories and exchange rates
• Consult Experts: Seek CPAs experienced in Philippine crypto taxation

Frequently Asked Questions (FAQ)

Are staking rewards taxed if I don’t convert to cash?

Yes. Taxation occurs at receipt, regardless of whether you sell or hold the rewards.

Do foreign exchanges report to BIR?

Only Philippine-registered platforms (e.g., PDAX) report automatically. You’re responsible for declaring income from international exchanges.

How is staking different from interest earnings?

Legally identical for tax purposes—both are taxable income at fair market value.

Can I deduct staking expenses?

Yes. Transaction fees, wallet costs, and equipment may qualify as deductions if properly documented.

What if I stake via a Philippine-based platform?

Platforms like PDAX may withhold 15% creditable withholding tax. You still need to declare gross rewards in your ITR.

Disclaimer: Tax regulations evolve rapidly. Consult a certified tax professional before filing. This guide reflects interpretations of BIR circulars as of 2024.