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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."
So, will this mean fewer gold spammers? I suppose we shall see.
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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.
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.
The announcement was made on Sep. 28th. It was only recently pushed to the Administration of Taxation's website.
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From TFA: Many said itâ(TM)s unfair to tax on individuals while internet companies are exempt.
I don't know how broadly they define "internet companies" but it sounds like the gold farmers aren't affected by this tax. They run sites to sell it, so are probably exempt.
...the IRS will do the same in the US. After all, this new administration campaigned on raising our taxes. So don't complain.
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I wonder what unique items would drop a chinese tax collector.
Virtual tax!
- Just because we CAN do a thing, does not mean we SHOULD do that thing.
Hopefully this will slow the rate of gold farming, if the Chinese government is serious about enforcing this. But I don't see why they wouldn't. It's pure profit.
Some might think that this is yet another ridiculous taxation - imagine how government is going to use all the virtual tax they've collect: establish a virtual central bank? Exchange the virtual money in virtual exchange market like ebay?
Actually they don't need to. Most forms of virutal money in China are having their real life exchange market.
In the article you can find that cute QQ moscot representing qq.com, who issues Q-coins. This is one very good example. QQ-coins can be used in virtual exchange, and real-life exchange. QQ-coins in your QQ account can exchange fixed-value (say 5-yuan) QQ cards, which can in-turn exchange real goods of the same yuan value in many stores.
As you may see, well-established virutal money such as QQ-coins has real and stable exchange market.
Of course, this new tax might not impact virtual trading as much as wsj would imagine. China people trades virtual goods with real money. Alipay, a paypal-like payment method, has been very well-adopted in China. Existing taxation laws has already covered online trading as such.
Jeez, at least read the summary if you can't be bothered to read TFA
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The article linked to says they make 145$ a month. How in the hell misleading is that. Profitable would be at least nearing minimum wage... Obviously we are talking about poor parts of china but its still misleading.
I mean, none of them are given by laws of nature. Mabye one backed by gold or similar would count as not virtual?
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I dunno, do you need to define virtual currencies at all? The way I see it, you can ignore it until you try to sell that virtual gold for RL money. (Or virtual items, same idea.) How's it different from any other RL sale for RL money? The guys selling any other stuff already paid VAT and income tax, so I fail to see why gold farmers wouldn't.
And to get even farther away from the "but it's virtual" aspect, think of it as a service. You pay me X dollars, I do service Y for you. In this case the service is helping you get a better equipped character. After all, when you take a taxi or book a flight, you don't get a tangible good either. You just got the convenience of getting from place A to place B faster than walking. I think the same can be used to describe power levelling, gold farming, item farming, etc: someone provided a service that saves you some time. RL time too. There's nothing virtual about X hours saved in WoW, because it means the same X RL hours.
We tax taxi companies, we tax airlines, we tax plumbers and mechanics, and we tax pizzerias. Probably the Chinese do too. Why wouldn't the same apply to someone whose service is related to a video game?
And yes, I'm pretty sure that income from stock trading is taxed already.
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...I'm wondering how long not-so-legal organizations have been e-laundering real money into virtual moola.
Your minds make it real.
What is gold worth?
A banana is worth more to a rat than a kilo of gold.
You may think the rat is stupid, but you can't eat gold.
So the only way you can get food for gold is if someone else _believes_ it's worth giving you food for it (or at least something else that can be eventually traded for food).
I wonder how many bananas the Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund can buy now. I'm sure it's a lot less than what people believed it could in 2007.
Or hire one less employee...
Not that I care about this that much, but really? The Chinese government is taxing gamers that sell game money?
Granted, people are dumb enough to spend their hard earned money buying game gold.
But taxing those who sell it? even more ludicrous.
This is part of why I avoid MMO games like the plague. They're filled with stupid people who have no life. And before you say, "wait a minute, I have a life and I play", Nope, no you don't.
I have said this before, all MMO games to date have been an endless cycle of carrot on a string. Upgrade, socialize, upgrade socialize, upgrade, socialize. I've got better things to do and better games to play. Games that can actually be completed.
They're using their grammar skills there.
Now all the Chinese officials will be twinked!
So in whose mailbox will gold farmers be depositing their loot taxes?
I wonder if the Chinese tax collectors would accept virtual money. Or maybe Monopoly money?
If "disco" means "I learn" in Latin, does "discothèque" mean "I learn technology"?
If I buy commodity X at $1 and resell it at $1.50 (or equivalent RMB) and I do it repeatedly, I'm a dealer of X. Tax agencies throughout the world will tax me the majority of the time on this profit. X can be anything--shoes, cars, houses, e-gold.
So, Chinese government is making it clear that you have to prove a basis cost of $1, otherwise they will tax you on the full $1.50.
This is normal, expected, and even reasonable (the righteousness of the concept of taxes aside).
I think this would be fair if they took the tax revenue and plowed it back into their virtual infrastructure - paving virtual roads, building virtual bridges, paying virtual police and firefighters, and so forth.
Governments get to tax but that means they have an obligation to help provide the infrastructure. Is the government going to contribute anything to that virtual world?
That is that once 'money' remains virtual it is fine, but once it is Cashed Out into real currency then shouldn't it be taxed as would any other income? For example, if you sell an idea on Ebay for 10,000.00 and this money gets deposited in your bank account, shouldn't you declare this as income?
Unless I am misunderstanding the intent of this law (it surely can't mean that if I sell a piece of armor to someone in WoW for 10Gold I need to pay 2USD in tax),I don't see why it is a big deal. Or how companies making 500 million were not paying taxes on it. Were certain classes of income 'Tax Free' in China previously?
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-Gel214th
OK Troll, I'll bite...
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The point of playing is not to reach the end, but to enjoy playing.
I do admit that enjoyment does seem to elude a lot of gamers, but that is their problem not the game.
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