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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."
I'm curious to see how precisely they define virtual currency. If they're using something like "property which has no physical manifestation, and is not legal tender, but which may be exchanged in certain markets for legal tender", then congratulations china, you just slapped a 20% tax on a whole range of derivatives and options traded in stock markets worldwide. Mind you, not entirely sure I disagree with doing that, in principle anyways.
Because someone would undercut them?
What do I win?
Seriously, the cost of the good (in game gold) is currently based on the difficulty of procuring it. Someone has to pay the farmers to sit around and do mindless repetitive tasks. After this, the cost of the good will be based on two things. Therefore the price goes up.
True, but only if your profits are greater than $250k annually. If your profits are that high, tighten your belt and buy one less Porsche this year. I know, it'll be rough.
Say bad words about my book, in cold oatmeal, or I shall sue!