Korea starts taxing RMT
(Visited 8082 times) Game talk
Jun 262007
RMT Taxation starts in Korea from 1 July 2007, says this translation of the original Korean article. It only applies to those who have a certain volume of transactions — folks doing more than 6m won every six months (around $6500) will have the mediating party (e.g., the RMT company) collect the tax, and folks over 12m won in a half year have to get a business license.
Apparently, this is a deal cut by the RMT companies…
12 Responses to “Korea starts taxing RMT”
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It will be interesting to see how much of the business moves offshore from Korea or to SMS or other networks that are harder to track than the web.
Also, I think a number of the sellers are already offshore and may not want to enter any sort of relationship with the Korean government.
I’m wondering just how enforcable this is going to be. It will be interesting to see how things go over the next year or so over there.
[…] Clicky I read the article during my mid-morning coffee/blog read. The thing that gets me is the discussion around who owns virtual items. No one does, and companies have stated so in the games’ TOS. Imo, governments should consider income from the sale of virtual items as game winnings. If someone determines that I have property in a game, that opens a slew of issues. For example, can I charge someone with actual theft in Eve? Like someone somewhere once said, ‘Keep it simple stupid’. Simply tax the income from the sale of items and please please for the sake of all that’s good, don’t start assigning real asset value to virtual goods. […]
Wow.
I don’t know much about the commerce infrastructure over there. But thinking at it from the Western pov, it seems pretty easy to track all companies conducting such activity through the electronic transfer nature of them. Not like you can hide behind a cash-only business as easily when conducting RMT. I guess my question would be: just how well integrated on the financial and game institutions over there to prevent companies from hiding their truth worths?
Good to see that they’re picking a sane point of collection for the taxes: the point where real-world currency is involved.
I have to ask though — can a casino still kick you out if you offer to sell another player at your poker table the ace you have in your hand? — whether the government can collect a cut from that transaction or not.
[…] Korea has moved to tax Real Money Transactions in online games, as reported at IM69 courtesy of Raph Koster. Apparently, the approach was brokered as a deal between several RMT mediators (who recently formed […]
I read the book Play Money. This is the start of something that could get out of hand.
With a girlfriend that is going to become a CPA, it’s nice to have a tax expert able to explain the following to me. Although I’m no slouch myself, sometimes I need a little extra push to understand some of the complexities.
The base argument is this:
Because of RMT, every object in the game now has some inherent RM value. Whether or not you ever intend to sell it for RM in the eyes of the IRS is irrelevant.
When you acquire items in the game, wheather as loot or crafted, you are getting income. When you trade items/credits for items/credits you are engaging in a barter, which is a taxable transaction if you make any sort of profit on it.
To make sure the record keeping is on the level, an mmo game company would have to send 1099 tax forms to everyone with summaries of their activities and end up paying taxes if they managed to make profit for the year in the game.
The *real* kick in the pants is that, because you have operating costs (fixing items, aquiring resources for crafting, item loss to death, etc.) these are all deductible from your taxes! You can even include the monthly access fee for not only the game, but the access fees for your ISP, new hardware, etc. etc.!
Fortunately the very nature of an MMO makes all of this extremely easy to track and report back to you. However, would it be feasible for EVERY MMO to add a new “Accountant” class to help people with submitting tax forms? 🙂
@Jim – I live in Vegas. Yes, they can kick you out because you are violating the rules of the game. The dirty secret of vegas is they can kick you out for almost any reason they deem fit and put your picture in “The Black Book” and see to it you never get in another Casino in Vegas again.
[…] has moved to tax Real Money Transactions in online games, as reported at IM69 courtesy of Raph Koster. Apparently, the approach was brokered as a deal between several RMT mediators (who recently formed […]
[…] Korea has moved to tax Real Money Transactions in online games, as reported at IM69 courtesy of Raph Koster. Apparently, the approach was brokered as a deal between several RMT mediators (who recently formed […]
Moe-
(Taking the casino analogy a bit further.)
Assuming that RMT is disallowed by the game’s ToS, is selling a Sword of Smiting +500 (which helps you win the MMOG) significantly different than selling that ace (which helps you win the poker hand)?
Does the IRS tax you each time you win a hand, or when you cash out?
Does the IRS have the power to write its own codes about virtual money (like poker chips, plat, or virtual gold), or can Congress pass a law that says, “only collect taxes when it turns into real money”?
It’s probably fairly clear from these questions the approach I favor. Hopefully that approach (or something equally sane) wins out.
If I understand it right, the laws are already in place for the IRS to interpret. They may not be enough for this new industry, or they may be.
The way I see it, the laws may apply differently to regular players and incorporated businesses dealing with RMT. But that’s for each country to determine.
From there, new laws can be written by congress, or whatever official agency is involved, to deal specifically with issues that arise from the gaming industry.
As far as US laws go, I think the issues are already on the books. They don’t tax companies for “soft” assets like computer programs, only for inventory, etc. Equipment can be written off as it depreciates, so RMT corporations might make use of this expense. Players heavily into RMT individually might incorporate to make use of this. But there’s restrictions on personal items used for business and how it relates to the home, so that comes into play also.
I’m not an expert, so anyone who knows more, please do correct me.