China’s taxman came

 Posted by (Visited 6180 times)  Game talk  Tagged with: , , , ,
Nov 032008
 

Virtual Worlds News: China Levies 20% Tax on Virtual Currencies.

This is completely unsurprising — after all, levying tax on earnings made via selling virtual goods is something that the US does already (if you make money, they expect a cut, no matter where how how you made it) and it’s a lot more common in China than here. But there’s a wrinkle:

The ruling applies to QQ coins and the like as well as gameworld currencies, and based on the WSJ report, seems to apply whether or not the value is cashed out.

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.

Interestingly, companies seem to be exempt from taxes like these right now, presumably because the government there did so in order to incentivize economic growth in the sector.

However, if the value is not cashed out and taxes are still paid, that could mean (maybe should mean) that the companies are liable if they manage to accidentally delete some of it. In other words, they’re banks.

  3 Responses to “China’s taxman came”

  1. While looking to make an insightful comment, all I’m coming up with is “holy crap”.

    Really doesn’t seem that long ago that I read Halting State.

    I’m guessing that Non-chinese MMOs like Wow are glad they licensed the right to run servers in that country to other parties. Boggles the mind to think how something like this would apply, be determined, be policed, etc if numerous countries were to institute similar laws. Thousands of individuals all paying taxes on income incurred in other countries (where the servers reside), and businesses in some cases being run from elsewhere than where the servers reside. Blech. What a mess!

  2. Does this mean that “bad” players can get tax deduction from their losses somehow?

    Maybe the chinese government needs its own account in these games where all the taxes are sent, that would be fun!

  3. I also blogged about this issue over at VERN.

    I don’t think the article explicitly says that taxes

    “seem to apply whether or not the value is cashed out”

    , but instead refers to real money profits. The quotation you provided, in my opinion, translates to making real money profits in selling virtual currency at a mark-up. Otherwise it would refer someone buying VC with VC and then selling that VC to someone who buys it with VC. 🙂

    The paragraph about qq-coins and other SNS’s currencies is a bit ambiguous. I guess the writer might have elaborated own her own a bit. Unfortunately, it leaves a bit too much room for speculation.

    Article also discusses China’s incentives to prohibit exchanging VC to RM. This would also suggest the taxation was on these transactions instead of VC-VC or VC-VA(virtual assets). Someone with a knowledgeable in Chinese could interpret some of the original texts…?

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