China Sends Tax Collectors Into Online Worlds

from the good-luck-with-that dept

Mon, Nov 3rd 2008 9:50am — Mike Masnick

A few years back, we discussed whether or not politicians would eventually try to tax virtual world winnings. After all, if there's an exchange rate to real money with fake virtual money (as there usually is), then wouldn't holding all your money in these virtual dollars be seen as something of a tax dodge? Indeed, Australia took the lead in this two years ago, with plans to tax virtual earnings. Now, it appears that China has signed up as well, and will begin taxing any virtual world earnings at 20%.

This actually follows on a failed attempt to ban earning any money on the trade of virtual currencies. That ban had been announced last year, basically as a way to avoid dealing with the taxation issue. When the Chinese government realized that people were ignoring the rules and still earning and trading money in virtual worlds, it reversed course and has now added the 20% tax. What's unclear, of course, is how they plan on enforcing it. Will China take some of its tens of thousands of Great Firewall employees and send them into World of Warcraft for an audit?

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Filed Under: china, tax collectors, taxes, virtual worlds

18 Comments

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GeneralEmergency (profile), 3 Nov 2008 @ 10:11am

OK....But....
....Would it be a real life crime to attack and kill the avatar of a tax collector??

This development in cyber-law almost begs the creation of a "Hill-Billy Run" MMORPG where you collect and buy ingredients, setup and run stills, run and sell moon-shine and dodge those pesky revenue'ers. And the revenue'ers would be real life tax men.
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James, 3 Nov 2008 @ 10:13am

virtual tax
so can you pay with virtual money?
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DS, 3 Nov 2008 @ 10:34am

Re: virtual tax
Better yet, can you bribe with virtual money? Or a virtual trip to a virtual whorehouse.
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GeneralEmergency (profile), 3 Nov 2008 @ 10:45am

Re: Re: virtual tax
...But what if you catch a virtual STD?
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DS, 3 Nov 2008 @ 10:49am

Re: Re: Re: virtual tax
Virtual Doctor.
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Anonymous Coward, 3 Nov 2008 @ 11:21am

Re: Re: Re: virtual tax
At least your virtual thing would only virtually fall off.
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Lucretious, 3 Nov 2008 @ 11:34am

for a country that prides itself on being communist, China sure has many of the trappings of a capitalist society.
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Anonymous Coward, 3 Nov 2008 @ 11:35am

"Virtual tax" doesn't sound as cool as "cyber tax".

That needs to be amended.
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Killer_Tofu (profile), 3 Nov 2008 @ 11:37am

I Know It Wont But
Hopefully this will discourage some of the gold spammers from MMOs.
Nothing is more annoying than a gold spammer. (Although that is not always true)
But, it probably brings in good cash to companies such as Mythic and Blizzard. They pay for accounts to sell the gold.
People report them.
Accounts get banned.
Blizard or Mythic or any such company still got the sale, for a customer that will no longer be playing because they decided to gold spam. For those who are not knowledgable of what I speak, it is where they have farmers who farm gold in the game, and then they have an account spam people in game for buying the in game money for real life money. That was a large run on sentence, yay. I have seen arguments both ways for whether or not this actually helps a games economy.
Personally I do not like them.
Hearing enough stories about the gold spammers being from China, no wonder China wants a piece of that pie.
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Anonymous Coward, 3 Nov 2008 @ 11:47am

why don't they pull an RIAA...
they could just assume that everyone with a computer must be making money in a virtual world and ad a fee to the purchase of a computer, game, and everything required to enter one of these virtual "cashgrabs".
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Hulser, 3 Nov 2008 @ 12:26pm

Catch-22
Will China take some of its tens of thousands of Great Firewall employees and send them into World of Warcraft for an audit?

I realize that this question was at least semi-sarcastic, but in WoW, buying or selling in-game gold for real money is forbidden by the terms of service, so how can you "tax" it? In other words, if you are a Chinese gold farmer and you report your income from selling WoW gold, you've just admitted that you've broken the terms of the service for WoW and, if Blizzard catch you, they'll deactivate your account.

I know there are games where the company says that it's OK to buy in-game money with real money, but for games like World of Warcraft that at least attempt to keep the system closed, I don't see how you wouldn't fall into this Catch-22.
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NullOp, 3 Nov 2008 @ 12:26pm

Satisfied?
NOW do you understand that the simplest of motives are usually, if not always, the correct ones, namely greed. Everyone wants their cut, their piece-of-the-pie. Basically whatever they feel they are "entitled" to.
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Bill, 3 Nov 2008 @ 12:35pm

It would make more sense if China were to demand that all virtual games comply with a ruling that any game that allows virtual asset to be sold will incur a hefty tax. That takes the burden off the end users who simply take advantage of a lax gaming environment and places the burden squarely on the developers who have the power to adjust the game. Also this would vastly cut wasted time and money trying to track and monitor the sale of virtual assets. It makes more sense to fix the problem than support it by demanding a 20% cut of the profits. Seems like racketeering to me.
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Anonymous Coward, 3 Nov 2008 @ 1:33pm

Step 1) Find Tax Collector Account on WOW
Step 2) .modify gold 100000
Step 3) Turn them in for not paying their taxes.
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Killer_Tofu (profile), 3 Nov 2008 @ 1:40pm

Re:
You forgot Step 4) PROFIT!
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Andrew, 3 Nov 2008 @ 4:42pm

We happen to track virtual currency prices
We run a site that actually tracks the exchange rates of various virtual currency. We wrote a bit about this new tax and it will be interesting to see that if it is enforceable, if the Chinese gold farmers will pass the taxes onto American Consumers. You can check us out at: http://www.gamerates.com
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tom, 17 Nov 2008 @ 1:20pm

Yes its easy money to sell virtual money in china
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tom, 17 Nov 2008 @ 1:30pm

Yes its easy money to sell virtual money in china
My wife from china age 20 plays online games with her friends and people around the world and sell virtual money, gold and items for real world money. When your in a poor contry its easy to sell your items or money to rich kids in your contry or other contry. many play this games all day and night untiil the brake of dawn then sleep and get up and play 7 days or nights a week. im from san francisco USA. I was shocked to find out about this. my wife explaind how this all works to get money.
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