Now the taxman is after virtually everything you own?
Show me the money...
The credit crunch is now biting everywhere, it seems. Around the globe, the taxmen are turning their attention to the unregulated trading in virtual worlds.
In October, China’s tax authority announced its intention to make sure they were receiving their cut of this new virtual economy. Sweden and South Korea have also moved to clarify the tax rules in this area. Many of these transactions are already legally taxable in the UK, but are generally ignored (for the moment).
The problem is that either items or currency from many virtual worlds, like World of Warcraft, Eve Online or Second Life, can be exchanged for real world money ? often through trading sites built into the worlds themselves. In China, there are even ?gold farms?, where thousands of workers repeat actions in World of Warcraft to earn gold that can then be traded for real money.
But how do you tax transactions on goods that don?t exist in the real world? Well, the most obvious place to catch them is when virtual items are sold on eBay or other trading sites. Ironically, it is very easy to tax virtual transactions, because they are all logged and monitored by the world?s designers!
Slightly more controversial are plans to tax transactions where virtual goods are exchanged for virtual money ? and no ?real? currency changes hands. Unfortunately, since the ?virtual? currency still has a real value, it can still legally be taxed.
Of course, the problem could be solved by banning virtual trades for real money. This might also stop a few more people from spending so much time in Warcraft looking for that +46 throwing axe of doom?
