China To Begin Taxing Profits From Virtual Currencies

The Wall Street Journal reports that the Chinese government will collect a 20% personal income tax on any profits obtained through the redistribution of virtual currency. The legislation is intended to curtail speculation in virtual markets, which can be quite profitable. Quoting: "The announcement, which was distributed to local tax bureaus, specifically takes aim at those who buy virtual currency from gamers and surfers and sell it to others at a mark-up. Taxation officials are granted the right to determine the original price of online virtual currency if the individual fails to provide proof of an original price, it says. The policy would cover China's legions of online gamers, who can use online virtual currency to buy better equipment and new powers for their online warriors. But it also affects millions of others who use virtual currencies on instant-messaging services and Web portals."

Comments

Call me dense but...

[mlts]

I'm assuming this means that when someone sells virtual currency for real life currency, they pay 20% of the real life currency earned to the Chinese government?

If so, what will end up happening is that gold prices go up 25%, but the market essentially stays the same for the most part.

Re:Call me dense but...

[Anonymous Coward]

Grandparent was pointing out that the Chinese cannot arbitrarily increase the price of farmed gold even by oligarchy. Chinese gold farms are competing internationally. Due to China's huge market share international prices may rise temporarily, but they'll come down fast and China will see its market share shrink as gold farming grows in places which previously could not undercut the Chinese price.

Re:Yay

[cgenman]

Sadly, it doesn't seem that way. The WSJ article seems to be talking about currency speculation... I.E. buying gold from someone low and selling it high. Gold farming proper has no buy portion, and is merely grinding and harvesting from within the game.

This does seem to indicate that the door is open to potential future taxes on gold farmers, as well as a potential shift of gold farming activity to korea, vietnam, or other countries in the region. But for now, this sounds like a tax on buy low / sell high people, rather than the earn-in-game-and-sell people.

Aren't all currencies virtual?

[Bromskloss]

I mean, none of them are given by laws of nature. Mabye one backed by gold or similar would count as not virtual?