South Korea Now Officially Taxing Virtual Worlds

Next Generation is reporting that the South Korean government's goal to get their cut of the real money transfer industry is now in the works. Folks who sell over $6,500 worth of virtual goods or currency in a given year will have an automatic Value Added Tax (VAT) withdrawn by the service they contract through. That is, the middleman service will remove taxes automatically for these repeat customers. If a South Korean sells over $13,000 worth of goods or currency in a given year, the government considers them a small business. As such, individuals in that position are required to obtain a business license and take care of taxes themselves. "An NTS official claims the organization will be able to monitor all transactions as RTM mediators have agreed to share clients' transaction details with the authorities. 'NTS would be able to track all transactions for taxation of virtual items,' Mr. Choi said. 'This is not about defining RMT legal/illegal; we don't see any contradictory facts to Amendment for Game Industry Promoting Law - we are not about to judge if RMT is legal or not,' he added."

No, they're not

They're taxing real money that people make for selling virtual goods.

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Good to have that pointed out early. Really, this isn't much different from any other tax: real money changes hands, and the government takes a cut.

Re:No, they're not

Good to have that pointed out early.

That won't matter. We're still going to have 80 14 year olds crying that they're being put down "by the man" and explaining that this is nothing new (as far as taxation goes, at least) is going to do nothing but have them calling you a governmental shill.

80?

Not 79? Surely you mean 79 14 year olds. Methinks you have miscounted. Can't possibly be 80.

 

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We're still going to have 80 14 year olds crying that they're being put down "by the man"

Hello. Welcome to slashdot!

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It wouldn't be an issue if we didn't still have all the fricking flamebait headlines. Every SINGLE time this issue comes up, the headline is always "Someone is taxing virtual worlds" and in every single case that is woefully incorrect.

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> Good to have that pointed out early. Really, this isn't much different from any other
> tax: real money changes hands, and the government takes a cut.

Mr Sarcasm says: Really, this isn't much different from any other protection racket: real money ch

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A better article headline might be "South Korea making sure sales tax applies to virtual goods sold for real money" but that wouldn't be as inflammatory and probably wouldn't fit anyway.

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I don't get it... I expect stuff like this from Newspapers....but /. ? Maybe I'm missing something but are articles weighted on how may people click on them?

Actually, on the contrary

I don't get it... I expect stuff like this from Newspapers....but /. ? Maybe I'm missing something but are articles weighted on how may people click on them?

Actually the exact opposite is probably true. Most newspapers, at least in the western world, discovered around the start of the 20'th century that it pays to at least pretend to be impartial. Yes, they still aren't really impartial, and they still kept their opinion columns (although at least now they're more or less marked as such, and not as hard news) but they're a lot more subtle in their manipulation than that.

It's not even as much doing the morally right thing, it's just business. At some point the public as a whole was largely fed up with the hyperbole- and libel-ladden pieces of journalism and pamphlets of the 19'th century. So someone discovered, much to their surprise, that they actually have more readers if they just report the news, instead of fabricating it or outright telling people what to think about it.

Again, I'm aware it's still nowhere near perfect, and even "impartiality" means something slightly different to the media than to the rest of us. I'm not entirely naive, trust me. I'm just saying it used to be a lot worse. "Protocols of the Elders Of Zion" kinda bad, or claiming that Lincoln was at the head of some subversive African conspiracy. Inventing ridiculous super-villain-type plans of your opponents (e.g., that they're actually proposing building sewers or a subway so they can blow their own capital up from below, when their Illuminati masters order it) used to be just business as usual.

At any rate, nowadays an actual printed newspaper would be a lot less blatantly inflammatory there. Even if they wanted to manipulate you into being for or against it (which actually newspapers themselves don't often do, but is often is the case with PR pieces submitted as news), they'd work hard into making it look like they just gave you the data and you reached the "whoa, it's evil" conclusion yourself. Especially in PR there are people damn skilled at _not_ looking blatantly partisan. It would involve some interviews, some impartial study maybe, and in "journalistic impartiality" tradition it would involve two conflicting points of view, and they're not telling you which of the two to believe. (Just incidentally the one pro-taxing ends up saying the wrong things, and causing a "well, I'm not siding with _this_ guy" reaction.)

Unfortunately, (or maybe fortunately, you can choose) Slashdot stories are rarely submitted by real journalists. They're _usually_ submitted by nerds who never figured the "pretend to not tell people what to think" part, so they outright go ahead and do that. Some (though not all) even have an axe to grind, an ideological crusade to fight, and a messiah complex to save you all from the evil corporations/government/current-economic-model/wha tever. So, yeah, expect inflammatory stuff like this.

It's not like it's the first time anything like this happened, anyway.

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They're _usually_ submitted by nerds

No, they're usually submitted by marketers. They fraudulently astroturf wholesale in the comments as well.

You just need to look at the quantity of "product announcements" before products are even released to see th

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Well, there probably is a lot of that too, but I'm left scratching my head what would someone actually want to sell via _some_ of the stories. Take this one, for example. Whose marketter is trying to paint the South Korean government in a bad light, and ex

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I don't know where you live but the popular papers here certainly do push opinion on the front page.

But don't take my word for it :

http://www.nmauk.co.uk/nma/do/live/historicpage [nmauk.co.uk]

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I don't get it... I expect stuff like this from Newspapers....but /. ? Maybe I'm missing something but are articles weighted on how may people click on them?

As an editor on a national newspaper once told his journalists: "never let the facts get in the way

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Oh. I was hoping on paying my taxes with virtual money. :(

Exactly how it should be handled....

... and frankly, US tax law already handles the situation, but it is up to the individual to report their income.

South Korea simply made a law that requires the transaction service being used to apply the tax.

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... and frankly, US tax law already handles the situation, but it is up to the individual to report their income

However, that is largely unenforceable. Hence why stories such as this _are_ news.

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Not really. If you're making a few hundred a year, sure. But in that case the government doesn't give a shit, it isn't worth its time. If you're making a few thousands or tens of thousands, you run a risk of being caught and prosecuted. In this bracket

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Actually, US tax law does not cover the situation. You are confusing two different taxes. VAT is not the same as income tax. VAT is similar to sales tax, not income tax. US tax law does not currently have a sales tax for internet sales, unless the seller h

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Congrats, you successfully managed to snip out the part where he pointed out that the VAT (what's being enforced in South Korea) isn't the same as Income Tax like we have in the US. It's a sales tax.

Your post is like where you take a car and drop out the

Happens here too...

http://en.wikipedia.org/wiki/Income_tax_in_the_Uni ted_States [wikipedia.org]

terms of services and middle-man

The terms of services say the items and currency = $0 and the taxes are applied by middle-man?
so if you use ebay that you don't have to pay the tax?
also what games like Second Life where you buy and sell from the people running / making the game with out a

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the people running/making the game most likely are already taxed, so that's taken care of

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ebay would basicly be the middle man in this.

And in second life the ingame cash has a real world value (if I remember correctly), and thus that would be income/investments/net worth.

All this is doing is enforcing income tax. They sell something for $$, an

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Does the South Korean IRS tax you on ebay sales?
also for a small business can you wire off the costs of playing the game?

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In the eyes of most governmental revenue agencies, value of goods sold = amount that was paid for them. If you use eBay, like if you sell in the US, you are required to declare the income yourself. The law just made it mandatory for middleman services to

In Communist North Korea....

Virtual worlds are now officially taxing you!

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What a stupid joke.

In North Korea, if you are so much as caught with an unauthorized radio, you are as good as dead.

I doubt a North Korean could get access to a computer unless it was part of his job. And if so, then he had better use it for that jo

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North Korea: So bad even the Chinese hate him.

Should I RTFA?

Maybe I missed something, but...

[this] is not about defining RMT legal/illegal

Ummm.. can you tax illegal money transfer? And, like, imprison a thief for tax evasion along with, say, robbery? If they're taxing it, doesn't it HAVE to be legal?

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Al Capone wasn't arrested for bootlegging, but for not paying taxes.

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Al Capone wasn't arrested for bootlegging, but for not paying taxes.

Let's see here - that is a tough decision. Booze or taxes ... booze or taxes ... I guess I'll have to flip a coin. ;-)

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In the US the answer is yes.

You may want to checkout Tax Evasion issues that Organized Crime deals with.
Heck, Al Capone got nailed with Tax Evasion.

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They already tax illegal drugs. http://money.cnn.com/2004/03/31/pf/taxes/strangeta xes/index.htm [cnn.com]

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If they're taxing it, doesn't it HAVE to be legal?

Nope, the IRS explicitly says that any money you get, legal or illegal, must be reported and can be taxed. It's just one of those ways governments have of artificially increasing the severity of the charg

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Ummm.. can you tax illegal money transfer? And, like, imprison a thief for tax evasion along with, say, robbery? If they're taxing it, doesn't it HAVE to be legal?

No. The IRS rules clearly state that you're required to report ALL income, including income from the black market, illegal sources, etc.

As was cited earlier, Al Capone was convicted of tax evasion. It doesn't matter if you're out there selling we

Re:Should I RTFA?

Okay, people keep saying this ... but when I report my "drug sales" net income (after amortizing my .45 and deducting bribes), won't they just turn that right around and charge you with a crime, implicitly requiring you to waive the fifth?

No, I'm not asking for personal legal advice, all you lawyers out there. I'm just asking if information disclosed this way has some special legal protection. It won't apply to me, since I don't sell drugs, so don't fret.

I might as well mention what the real problem is here, since people keep saying, "if you make a profit in terms of real dollars, that should be taxed, case closed". But if virtual money becomes liquid and convertible enough, government will *have to* tax it directly, even in-game. Why? Imagine this:

I want to defer taxes on dividends, like, you know, every investor with a taxable account wants to do. So let's say the stock exchange sets up "exchange dollars" (EDs), a special currency created and destroyed at will, simply by depositing a dollar or withdrawing it. The EDs are functionally identical to normal dollars, it's just that they only trade on the exchange. Whenever a corporation pays a dividend, it takes its normal dollars, buys EDs, and distributes the dividends. Whenever a corporation raises funds in an IPO, it takes the EDs and converts them to normal dollars. Now, should the investors still pay taxes on the ED dividends they got?

If you say no, then you don't think dividends should be taxed, because this scheme could be implemented today on the stock market -- but obviously, the government wouldn't fall for it.

If you say yes, then you agree that sufficiently-convertible virtual dollars should be taxed even if the profit exists only in-game. At some point, the virtual dollars become like the EDs or a foreign currency.

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I believe that the money would be taxed as soon as the investors converted the ESDs back into regular dollars, just as the game money is being taxed when it is traded for real money.

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So, you don't think dividends should be taxed, and all investors are overlooking a way to defer taxation of their dividends?

(Remember: simply delaying the point at which you are taxed on your total gain can increase your returns, even though you "still pay

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As long as the money is taxed, along with any interest gained on it while it was in the alternate currency, I don't see a problem. The goal of taxes is (hopefully) not to prevent profit, but to ensure that a portion of all money earned goes towards the pu

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Since EDs are backed by real USDs, a person could, without too much trouble, live without ever cashing out.

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Okay, people keep saying this ... but when I report my "drug sales" net income (after amortizing my .45 and deducting bribes), won't they just turn that right around and charge you with a crime, implicitly requiring you to waive the fifth?

Report it as com

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You need to define legal tender - if you mean, specifically, a medium of exchange that anyone who accepts cash is legally required to accept as cash*, then I agree with you (because the alternative is to make your legally-mandated medium of exchange comple

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Wow, I'm surprised this has withstood constitutional challenge. I mean, you're *required* to report income, which is in essence, a confession to a crime. I don't know how you can more clearly violate the fifth amendment right against self-incrimination.

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Oh, so I can evade taxes OR confess to a crime OR commit perjury. I guess it's kosher then. :-P

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Here's an article that tells about how they sent law enforcement to a music festival in Tennessee, not to stop drug use, but specifically to collect the taxes that are due on those drugs.

http://www.wbir.com/news/local/story.aspx?storyid= 46251 [wbir.com]

So yeah, tax

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According to the IRS, yes they do tax illegal activity. They just want your money... who cares where it came from! =)

You can see it here:
http://www.irs.gov/pub/irs-pdf/p525.pdf [irs.gov]

Go down to page 28 under the section titled "Other Income". There's all sorts of

Suppose

They outsource/move their farming operations outside of SKorea.How they will be taxed?
The people making money from this are usually well organized.

Adding Accountancy Skill to My Mage

HR&R Block will be starting up a server in WoW every March. All characters will be required to finish the "Form 1040" quest.

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North Korea has it's own virtual economy. Actually, it's the only economy they have.

*uses super power* *waves and ignores*