Taxation
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EU proposes strict new taxes on large technology companies
The European Commission has unveiled radical measures to better tax technology companies with large operations in its member states. The first proposal would allow countries inside the EU to effectively tax profit that is created inside their borders, regardless of whether the business in question has an office there. Under this rule, a company would be eligible for taxation if it had more than 100,000 users, earned more than 7 million euros annually, or over 3,000 "business contracts for digital services" inside the country. The Commission hopes this would stop companies from re-routing revenue to countries with more favourable tax laws.
EU hoping to close off corporate tax loopholes utilized by Apple and others
To say that Apple's off-shore tax practices came under scrutiny in 2013 would be an extreme understatement. Though the tax minimization schemes Apple employs overseas are no different than those used by other multinational corporations, the spotlight in typical fashion seemed to shine exclusively on Apple. That being said, Reuters is reporting that the EU is taking a closer look at how US corporations like Apple use what can sometimes be a complex maze of subsidiaries to reduce their overall tax liability. The European Commission will attempt to close a loophole that allows companies to cut their tax bill, a top EU official said on Monday, but the EU executive will first need to persuade member countries to back the change. The Commission wants rules to prevent companies setting up "letter-box subsidiaries" in countries, such as Ireland or the Netherlands, solely to qualify for a softer tax regime and cut their bill. Algirdas Semeta, the EU's taxation commissioner, wants to insert an anti-abuse clause by the end of next year, allowing authorities to target artificial 'parent-subsidiary' schemes that flout the spirit of the tax code. Now whether or not the proposed tax clause will gain any traction is an entirely different matter. The report notes that getting smaller EU countries on board may prove challenging to say the least. With so many countries having what often amounts to competing interests, it's hard to see this type of legislation being pushed through.
Sweden extending taxation into the virtual
Sweden is taking aim at online tax evasion and the estimated five billion Swedish krona (SEK) in annual undeclared income by the country's citizens. (This equates to roughly USD 645 million.) While much of this is revenue from "online marketplaces, porn, and astrology sites", undeclared income from games and virtual worlds are included in that figure. In fact, the Swedish Tax Agency (Skatteverket) looked at the sales of avatars and characters in 'computer games' over a 14 month period, with a collective advertised sum of 662 million SEK (USD 85 million). No income was declared on any of these transactions so it's a safe bet they'll be scrutinizing these sales moving forward. Although the specific virtual worlds and games aren't named, GameCulture adds that the virtual property Skatteverket is looking at exchanged hands between 7000 gamers and residents. Also interesting is what GamePolitics turned up on the situation -- "even U.S. citizens could be subject to Swedish taxation on such virtual transactions, according to the Economics of Virtual Worlds blog."
GDC09: Raph Koster kicks off Worlds in Motion Summit
Game Developers Conference (GDC) 2009 has begun and Massively is in the trenches to report on all the big announcements for the massively multiplayer online gaming industry, plus we have some great interviews lined up all week as well. Our GDC 2009 coverage begins with today's Worlds in Motion Summit, kicked off by Raph Koster, MMO and virtual worlds luminary. Koster's speech is short, essentially a quick review of the virtual worlds trends he's observed over the past year. It's important to see things in perspective, Koster points out, mentioning that virtual worlds have recently turned 30, and are now a far cry from their MUD origins. Hardcore, geeky stuff Koster says, and we've come a long way since then. "We've kind of arrived, haven't we?" Koster asks. "One half of American adults are gamers today, which is an incredible step."
When white collar crime goes virtual
The writing is on the wall. Legislation of the virtual space is increasingly becoming the norm. Just look at the ways in which Sweden, South Korea, and China are looking into implementing virtual taxation. It stands to reason that this is only the beginning, and regulatory bodies in other countries will begin to take a closer look at what's happening, economically, on the virtual plane. The economic turbulence felt in the United States (and beyond) and the numerous problems this creates has more people eager to turn a buck, somehow, and eyeing the unregulated economies of massively multiplayer online games and virtual worlds... and their potential for unchecked exploitation. At least, this is the view of Mark Methenitis, who writes the Law of the Game on Joystiq column, which focuses on legal issues as they relate to video games. Methenitis looks at the possibility of insider trading being applied to a virtual economy, wherein a developer has advance knowledge of a price fluctuation and takes advantage of this fact. The situation becomes far more complex, and serious, when an individual within a game company has control over the trade between real currency and the virtual currency in question, or has the ability to duplicate digital products. Methenitis doesn't cite any specific examples of this kind of financial manipulation, but explores the potential for exploitation on this level. More than anything, his observations are of a 'what if?' nature, but every scenario Methenitis outlines is certainly within the realm of possibility.
The slow demise of virtual tax havens
Is taxation of commerce in the virtual space inevitable? We've been hearing more and more about this coming out of China, South Korea, and Sweden, but a recent piece on BBC News -- "Slapping a tax on playtime" -- hits a bit closer to home for many of us. Flora Graham, a technology reporter for BBC News, spoke with Professor Edward Castronova of Indiana University, well-known for his research and commentary on virtual economies over the years, and game researcher Dr. Richard Bartle about the impact of taxation on games and virtual worlds. Castronova points out the idea of taxation of virtual goods exchanged for virtual money, saying, "... it's an extraordinarily dangerous development... It's as if every time I played soccer in my backyard and scored a goal, I would have to pay the government three euros. It takes away from the game's contribution to human happiness."
China legislates 20% tax rate on virtual currency profits
While much of the world's gold farming activity is based in mainland China, the black market industry operates in violation of the law. Despite this, a large part of the problem in curbing illegal activities in China is that there's a substantial divide between what the law states is illegal and the actual enforcement of those laws. This may well be the case with the law passed last week by China's State Administration of Taxation, which will impose a personal income tax rate of 20% on profits made from virtual currency.Juliet Ye at The Wall Street Journal's "China Journal" blog reports: "The policy would cover China's legions of online gamers, who can use online virtual currency to buy better equipment and new powers for their online warriors. But it also affects millions of others who use virtual currencies on instant-messaging services and Web portals." The widespread use of virtual currencies in China spurred last year's restrictions on exchanging virtual currency into RMB. If the new law becomes a reality rather than a technicality in the lives of China's internet users, it will be a substantial change in virtual economics in the country.
Should your GM be able to tax you?
This idea's been floated before, but a few people on the forums have responded pretty enthusiastically to the notion of introducing a "guild income tax." Others...not so much so. Basically, there was a proposal made in the Beta forums that Blizzard give GM's/officers the ability to levy a percentage-based tax on members' earnings. Jeff "Tigole" Kaplan responded, saying that it "was an interesting idea" and they're considering options for improving guild administration, but there was no way they could program a change like this in time for Wrath. Bear in mind that the original tax being suggested would apply to your toon both inside and out of raids (although no one was seriously suggesting that the tax should apply to non-raiding members of the guild).I have to admit that I'm not too keen on the idea of a broad-based "income tax" on players, if only because the game's current mechanics make it all but certain that the main beneficiaries will be people who either can't (due to class/spec) or won't put much gold into the guild coffers. Moreover, the taxation idea acts as an incentive for people not to guild their alts, thus avoiding taxation entirely on toons that are usually the real means of support for a raiding main (someone remind me to go reserve a hunter named Swissbank). As an herbalist/alchemist, I farm a lot for friends and have been known to chuck the guild bank a few hundred gold from time to time. Maybe I'd save time and money under a system that required me to hand over 2-3% of my income, but still. Being taxed removes an element of individual responsibility, and it certainly takes away the nice feeling you have for voluntarily helping others.If nothing else the idea's given rise to a few nice jokes (Cacora of Hellscream: "Do I get money back at the end of the year if I claim multiple alts as dependents?"), but the final word may well belong to Grig from Whisperwind: "So, Blizzard is considering taking one of the most universally loathed concepts from real life and adding it to a game. Why, they'd be silly not to do it."
The Sierra Club proposes video game and TV tax
The Sierra Club -- a group dedicated to environmentalism and preservation -- has proposed that a tax be levied against kids who choose video games or computers rather than venturing out-of-doors. The tax, also being referred to as "No Child Left Inside," would ostensibly encourage kids to get up off of their fat, lazy back-ends and hit the trails, mountains, and waterways of our nation's parks and other natural treasures... by further taxing video games and TVs. Recent studies have shown links to obesity, lowered academic scores, and the rise of attention-deficit disorder in America's kids to increased time spent indoors, though we suspect the problem lies with bad parenting rather than an entire industry of game-makers and electronics companies. Would adding a one-percent sales tax on our gear (and penalizing children who have plenty of good reasons to stay inside) increase kids' desire to head outdoors instead of "finishing the fight?" We've got our doubts.[Thanks, wasp2151]Read - A Tax to RememberRead - Sierra Club proposes 'couch potato' tax
The Second Life Philip Linden/Gavin Newsom Fireside Chat, part 2
This is the second of two parts to the Fireside Chat between Second Life's Philip Rosedale (aka Philip Linden) and San Francisco Mayor Gavin Newsom at the New Globe Theater, a meeting held and sponsored by Millions of Us, a metaverse development company (MDC), with Reuben Millionsofus as moderator. This is the mp3 and transcript of part two of the chat. You can hear and read part 1 here. Enjoy![Mp3] Download the MP3 directly[Thanks, Celebrity!]
Scientists test pay-as-you-go driving
Researchers from the University of Iowa Public Policy Center have developed a system for charging drivers federal taxes by the distance traveled rather than on gallons of gas purchased. The study is being conducted with 2,700 drivers from states like Maryland, Texas, Iowa and California to gauge public reactions and experiences with the system. The basis for the study is the declining tax dollars being paid for car use in the States; as fuel prices rise, cars get more efficient, and alternatives like ethanol and hybrids gain ground, our 18.4-cents-a-gallon tax on gas (which was set in 1993) remains static, thereby making it harder for The Man to get paid. Eventually, the government will have to find another way to generate tax dollars from drivers -- and researchers think this might be it. Instead of paying a constant fee on the fuel we purchase, drivers cars are equipped with a taxi-like meter, and users will be given a monthly bill for the miles that they've driven. We can only hope this is avoidable, perhaps due to the spontaneous existence of a free, plentiful, environment-friendly fuel source... or another revolution.[Via Autoblog]
