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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.
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
True, but only if your profits are greater than $250k annually. If your profits are that high, tighten your belt and buy one less Porsche this year. I know, it'll be rough.
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Gold farmers earn 145$ a month ... you'd need a whole village of farmers in your company to go above the limit. You'd need 145 of them though you still wont earn that much ~_~
Anyways stop spreading FUD you prick.
the article made it sound like these guys were making a killing. I don't think anyone will be buying a new car and a bigscreen tv on 145$ a month.
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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If you buy a big screen TV in china, made by a Chinese company, who is paying Chinese workers at Chinese pay scales to make the TV why would they have to sell it to other Chinese people for any particularly high price. Same goes for a car.
The materials for making these things aren't really all that expensive, and if everyone involved is making Chinese salaries the labor costs would be a lot lower too.
Just because the Chinese don't sell their TV's to us at a price you could afford on $145 a week doesn't mean that they don't sell those TV's internally for a price that you could afford on $145.
There's also more to measuring wealth than TV's and cars.
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.
but I have twins who are turning 16 this year and they can't share.. they'd be the laughing stock of all their friends..
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.
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 $1.50.
This is normal, expected, and even reasonable (the righteousness of the concept of taxes aside).
I think this would be fair if they took the tax revenue and plowed it back into their virtual infrastructure - paving virtual roads, building virtual bridges, paying virtual police and firefighters, and so forth.
Thats BS. If things were controlled like that I could have a guy in china buy me a tv and ship it to me. Oh and its 145$ a month not a week as you said. Anyways the article sounded to me like 'those damn Chinese are making a killing playing video games, lucky sobs' when they are living at what north americans would consider the poverty line.
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 said, a tv made for the chinese market probably wouldn't work in the US(or even plug into the wall) and China has an iron grip on a lot of their trade practices so it might be possible for someone to send you one.
You've also got to consider that a PC in the US which could run WoW would cost you several months wages at that rate, which sort of indicates that they might possibly be getting stuff a little cheaper if they can make a living that way.
You also haven't addressed the idea that there's more to wealth than big screen tv's and new cars.
I'm not saying that $145 a month is a massive amount of money in China, I don't live there so I really don't know, I'd say it's not an unreasonable living though, particularly for non manual labour.
I'm also the first to acknowledge(having been a WoW player) that while WoW can be fun, if all you ever did was gold farm and you had quotas to deliver and all that stress, it wouldn't be all that cushy a job.
China is first a capitalist country, they'd export cheaper if they could sell things at 1/5th the price. I believe they would multibox at least 4per computer and run shifts, get used and scrap computers it shouldn't be too tough. Fine my definition of wealth was a bit narrow minded it certainly seems that way in american culture which has spread through a lot of the world. And agreed.
/.
OT: After all the political and religious arguments I've had the last few months its nice having a disagreement that actually gets resolved rather than turning into a pissing competition. Thank you people of
Why would they export cheaper? If you can produce something for $10, and everyone else can produce it at $500 why would you sell it at $15 when you can sell it for $499 or even for $510 and still undercut your competition. Capitalism isn't about selling at the lowest price it's about maximizing profits. That's why you don't see large companies frequently undercutting one another. They realize that all that will do in the end is drive margins down to the lowest level that can be sustained, and all for a few months competitive advantage. Better to be roughly equal and have high margins than be the winner for 6 months and end up just barely scraping by.
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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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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