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China To Add 20% Tax On Virtual Goods Profits
China To Add 20% Tax On Virtual Goods Profits
November 4, 2008 | By Eric Caoili

November 4, 2008 | By Eric Caoili
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More: Console/PC



China's State Administration of Taxation announced that it will impose a 20 percent personal income tax on profit from virtual money.

The tax specifically targets traders and operations that buy virtual currency from others with the intention to sell it at a mark-up, such as "gold farmers" and account sellers in online games. The tax will also affect resellers in the region who trade in virtual currencies for instant-messaging services and web portals.

According to a report from the Wall Street journal, a poll by Chinese online portal Sina.com indicates that over 70 percent out of some 3,000 people voted against the new tax, with many worried about how the sum of property will be evaluated.

Blogger Ruan Zhanjiang wrote that, ďMany game players are classmates or friends in real life, thus most of them wonít have credentials when trading virtual money," says blogger Ruan Zhanjian. "Itís difficult to prove the original value of virtual currency, though."

Taxation officials have reportedly been granted the right to judge the value of a particular virtual currency if an individual cannot provide proof of its original price.

Some, however, believe that the new tax will protect their online property rights and help guard them from identity theft, which has been growing alongside the virtual currency trading market.

The WSJ claims that a research firm's study shows China's virtual currency market growing at a yearly rate of 15 percent to 20 percent, with several billion yuan worth of virtual money traded in the market.

This rapid growth has worried China's policymakers, who fear that it could lead to inflation or money-laundering, resulting in a restriction enacted last year preventing the conversion of virtual currency to yuan.


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Comments


James Smith
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Gold price goes up - hoppefully buyers, and therefore spammers, will go down. Thats the initial gamer in me reaction.



I can see the concerns this raises however, what if other countries decide that in game money itself needs taxing regardless of bought or not. I say that because lets face it, most govts across the globe just dont understand games or its systems and might blindly do such a thing. I cant recall where, sadly, but im sure ive read an article or two where a govt has suggested this.



Either way its a BRAVE move which I'm sure will cause plenty of outcry, and will no doubt be interesting to follow. Maybe the UK govt could start taxing gold sales, and then finally thus start giving tax breaks to us poor UK devs paying out of our arses to make a game in the UK...

Ken Nakai
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Somehow I doubt the Chinese Government is eyeing the billions of Yuan changing hands and thinking about stemming the tide of spam from gold farmers. Just another revenue source...



The problem is, the way those gold farmers are set up, I'm sure they're either okay with the 20% hit or just don't care because their costs are so low.



Here's to hoping that I can play WAR without someone I've never heard of sending me a whisper about gold (something I'd never seen in any other game...thanks to Mythic for making it easy for them to do that).


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