Virtual Goods Prices Rise in China After Tax Announcement

When China announced earlier this month that it would begin levying a 20% tax on virtual transactions, prices began to rise for virtual assets, reports Shanghai Daily.  According to the article, as details have emerged, it appears that sellers of virtual currency transactions will be obligated to report to the tax department and pay income taxes within 7 days of the sale. Officials are still unsure of what exactly should be taxed or how, but the issue will affect a large number of users.

The story reports that over 40 million people play online games in China and 80% have bought virtual goods. Chinese transaction platform 5173.com put the total transaction volume, I believe this may only be in China, at 9.36 billion yuan (US$1.37 billion) in 2007 and projects that it will hit 11.12 billion yuan (US$1.63 billion).

Platform providers are reportedly happy about the idea of a tax, as it may discourage illicit trading and out-of-world sales by unwanted third parties. They want it limited to transactions for official, recognized currencies sold by publishers, though, not all virtual items and currencies that carry only unofficial value.

Players seem unhappy overall.

"The price of gold [in games] has surged recently and it's difficult to purchase enough gold even if you have money sometimes," said WoW player Xiao Yan. [via Shanghai Daily]