Real Taxes for Real Money Made by Online Game Players
Successful online video game players and Internet surfers in China have found ways to make real money from virtual assets. Now China’s taxman wants a piece of the action.
The State Administration of Taxation said on its Web site Wednesday (in Chinese) that China will impose a personal income tax of 20% on profit from virtual money. 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.
This is fascinating. I know some staff members in Congress have had informal discussions on virtual world economies and taxation.
Another article on China:
[B]Chinese Government Gets In On Gold Farming Action With New 20% Tax [/B]
[B] [Eric Krangel](http://www.alleyinsider.com/Eric_Krangel) | November 3, 2008 4:35 PM [/B]
Last year China banned the sale of virtual currency in an effort to shut down "gold farmers" -- businesses that hire young Chinese to play video games all day and sell the proceeds (in the form of game currency or magic items) on [eBay[IMG]http://i.ixnp.com/images/v3.54.0.1/t.gif[/IMG]](http://shop.ebay.com/items/_W0QQ_dmptZVideoQ5fGamesQ5fGames?_nkw=linden+dollars&_sacat=0&_fromfsb=&_trksid=m270.l1313&_odkw=world+warcraft+level+70&_osacat=0) (EBAY) or [online[IMG]http://i.ixnp.com/images/v3.54.0.1/t.gif[/IMG]](http://www.google.com/search?hl=en&client=firefox-a&rls=org.mozilla%3Aen-US%3Aofficial&hs=bF6&q=world+of+warcraft+gold&btnG=Search). The Chinese government did nothing to enforce its own ban, so it remains to be seen whether Beijing follows up with its latest edict: Gamers who sell virtual goods for a profit will be taxed at 20% of the proceeds, the same rate applied to profits on real estate or other transactions.
In December 2005 the New York Times estimated 100,000 Chinese were employed full-time in the gold farming industry, and consulting group iResearch says the virtual currency trade is a $1.4 billion dollar industry growing at 15 to 20% a year.
