tax
Latest
Tiga: 1,700 industry jobs will be lost without UK tax breaks
Tiga CEO Richard Wilson has written an open letter to the British government, claiming that 1,700 jobs will be lost in the UK video game industry over the next five years if it doesn't receive tax breaks. He also believes that if the industry received a 20 percent production tax credit, that investment would increase by £220 million ($303m USD) over five years and create 1,600 jobs.Tiga requesting tax breaks in the UK is nothing new, but the organization has been stressing the issue lately. International competition from France, Canada and the US is taking its toll on UK-based developers as, according to the letter, "the UK game development industry fell from third largest in the world based on revenue in 2006 to fourth position in 2007 and is expected to fall to fifth place in 2009."
Pennsylvania legislators consider violent game tax
GamePolitics spent a little time at the Pennsylvania House of Representatives last week for its hearing on violent video games. During the proceedings, a pair of State Representatives questioned the Penn. Joint State Commission about ways violent video games could be targeted. For example, putting a 5% tax on violent game sales, with those funds being allocated to parental education programs. Another suggests withholding tax incentives from companies that make violent video games.To be clear, the meeting was exploratory, so it's a lot of talk and very little substance -- like most government conversation about video games (www.instantrimshot.com). If you're in the mood for watching congressional proceedings about taxing video games, check out the video after the break.
Tiga: 85% of UK developers want tax breaks, programmers not easy to find
This made us laugh: A report by UK trade organization Tiga found that 85% of developers in the UK supported tax breaks for game production. Only 85 percent, really?! Did the remaining 15% not understand the question? Anyway, the report also covered the UK game industry's slipping size and skill shortage.Of the 100 UK-based CEOs and managing directors surveyed, 63% had faced skill shortages in the last year, with programmer vacancies as the most challenging to fill by 74% of those respondents. Tax burdens and foreign competition were listed as the top two barriers to expansion. Tiga CEO Richard Wilson hopes that the government will introduce a 20% tax break for local developers so the region can compete against Canada and a growing number of US States with tax incentives. [Image]
Wisconsin placing 5% tax on downloaded games, items
Wisconsin will implement a 5 percent sales tax on "digital goods" starting October 1, reports The Spectator. The tax is expected to raise $10.9 million over the next two years; meanwhile, the state currently has a $6 billion budget deficit. That's like trying to melt an iceberg by licking it.The tax will affect music, movies, digital books, ringtones, games and DLC -- no mention of porn (but that's streamed now anyway, not really "downloaded"). Wisconsin isn't pure evil, though, it did begin offering a 25 percent tax break to game developers last year. You take the good, you take the bad, you take them both and there you have: the facts of life. [Via GamePolitics; image credit: cdw9]
ECA leading 'action campaign' against proposed digital distribution tax
If you've ever wondered what the Entertainment Consumers Association actually does, here's your answer -- in an attempt to combat a proposed tax on digitally distributed content and games in a number of states, the ECA is mobilizing its troops in an "action campaign" against these taxes. Specifically, the group will be rallying its members in Washington, Mississippi and New York to protest DLC tax bills that are currently working their way through their respective state legislatures.In an email to ECA members residing in Washington state, the organization's redundantly named president, Hal Halpin, pointed out the unconsidered negative effects of such a tax, saying it will "suppress consumption, which will cause layoffs at effected businesses, including the video game industry, which employs many Washington residents." We can't wait to see what protest tactics the ECA employs in Microsoft's home state -- folk music? Cosplay? We're betting on rampant property destruction -- after all, it's not a Washington protest until you bust up a few Starbucks.
North Carolina considering digital download tax
North Carolina legislators are looking to modernize the state's tax code by including digital download charges. News-14 reports the new tariff could generate $12 million over the next year, a paltry figure compared to the state's currently expected revenue shortfall of $2 billion.The new tax would affect digital purchases of music, movies, software and games. Rep. Paul Luebke (D) explains that it only makes sense that customers should pay state tax on digital items, because it's just like any other store. That may be, but is the way out of a bad economic situation to tax the consumer more?[Via GamePolitics]
LGJ: Virtual Taxation
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games: It seems around this time every year, with W2s and 1099s filling mailboxes, that someone thinks it's a good idea to bring up the idea of taxing the virtual world. The irony really is that most of these discussions are far from complete and often only address one potential viewpoint that could be taken. The latest commentary comes from the Washington Post (via GamePolitics) with further follow up on New World Notes based on a recent publication by the IRS. Their basic contention is that the essential difference in the Terms of Service between the Second Life model and the more traditional MMO model (i.e. World of Warcraft, Ultima Online, Everquest) would mean different tax treatment. I don't think it's nearly so cut and dry.
Final Fantasy XI's development team sits down for a round table discussion
The development team of Final Fantasy XI, everyone's favorite notoriously hard MMO, recently sat down with Carolyn Koh of MMORPG.com during their annual fan festival for an in-depth look at why the team made some of their decisions in the game's design and what we can look forward to in the future.The roundtable is being introduced in a three part discussion, which covers topics like the campaign system of the latest expansion, questions about the items and jobs, and questions regarding PvP and the future of Final Fantasy XI. With the game recently making headlines with a controversial server transfer policy, it's good to see a bit of positive coverage paired with some insight into the 6 year old game -- especially with new features like Moblin Maze Mongers just appearing. Plus, our favorite addition to the game with the December update: No more sales tax in Jeuno! Can't forget about that. We think it's about time for us to clean our equipment chests.
EU considers taxing GPS / TV-enabled phones as "multi-functional devices"
Oh noes! The European Union is reportedly mulling a tax increase on handsets that boast TV receivers or GPS modules, and we're not talking just a few pennies (or whatever you folks use over there). The European Commission has put forth a proposal to "reclassify some phones as multi-functional devices, which would trigger a 14-percent tax on mobiles with TV receivers and 3.7-percent on navigation-enabled phones." Needless to say, both Sony Ericsson and Nokia are vehemently against the increase, with an SE spokesperson noting that "these new duties would inevitably lead to a high increase in consumer pricing at a time where we are all struggling to keep prices as low as possible." We're told that a final decision won't be made for at least six months, and honestly, we hope the whole initiative just gets lost in the shuffle along the way.[Via mobileburn]
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.
French courts require foreign vendors to remind customers about 'iPod tax'
A French court has ruled that online retailers shipping music players to addresses in France must warn the customer that they will have to pay the "iPod tax" once the device arrives in the country. France enacted a levy designed to compensate copyright holders to the tune of €40 per device for illegal file copying. French retailers roll the levy into their price, making vendors outside France more attractive, price-wise. The levy applies to music players, USB storage, and blank media. While the warning is now necessary, it's no guarantee that the tax will be paid. The UK, Canada and Japan have all considered or tried a similar fee, but all have failed for one reason or another. [Via The Register.]
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's virtual goods taxation sparks price increases and controversy
China's State Administration of Taxation recently imposed a 20 percent income tax rate on profits made from virtual currency and virtual items, sparking price increases for virtual goods. While this tax rate (if actually enforced) clearly impacts the virtual space, it also affects transactions happening outside of MMO servers and virtual world grids. The taxation policy could ultimately extend to the virtual currencies linked to the largest IM providers in China such as Tencent, drastically increasing the percentage of the population affected by the new laws. Despite this, the positive benefits of eliminating gray and black markets for virtual items and currency may outweigh the drawbacks for gamers and users of the various digital services in China. Questions remain about what will and will not be taxed in the virtual space, but it's clear that individuals who gain virtual income are expected to declare their profits and pay taxes on this, and do so within seven days of having earned the profit, according to Shanghai Daily.Taxpayers who can provide proof of the value of this property or the value of the transaction are taxed at 20 percent on their profits, while those who cannot provide sufficient verification are taxed at three percent of the total transaction value. But how many people are affected by this new system?
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."
Bill proposes bill break: five-year wireless tax freeze on the table
Though it's been proposed and shot down before, a renewed effort to cap federal taxes on wireless service in the US has a fighting chance of making it through Congress this time thanks to bipartisan support and a pretty crappy economy that could use all the breaks it can get right about now. Senators Ron Wyden and Olympia Snowe, representing both sides of the chamber, are trying to push through a five-year ban on tax hikes -- welcome news to pretty much any subscriber who takes even a fleeting look at the buffoonery on page one of their bill. Unsurprisingly, it's also welcome news to carriers who embrace any opportunity to lower their bills without any action on their own part; Verizon for one has come out to say that it "applauds" the legislation. How about a bill to ban 20-cent text messages, hmm, Verizon? Would ya applaud that? Thought not.
Unsubsidized iPhone prices
Stories about cell phone unlocking and resales have hit the news recently. TracFone sued numerous resellers who (legally) bought inexpensive subsidized units, unlocked them and sold them overseas. In the iPhone world, the story differs. Rather than leveraging subsidized prices, the way the TracFone defendants did, iPhone resellers added value on top of the unsubsidized units. They bought the phones, unlocked them and sold them for a profit. The story gets more interesting with the current generation "no commitment" iPhones. The latest 3G "no commitment" iPhone pricing appears to include an extra $200 profit margin on top of the $200 subsidy. TUAW reader Adam Jenkins offers proof. In Massachusetts, purchasers pay tax on the full unsubsidized phone price, regardless of carrier subsidies. The 5% sales tax for his new 16GB 3G iPhone came to $24.95. Clearly, Apple and the State of Massachusetts believe the unsubsidized 16GB price is $499, not the $699 "no commitment" price. That extra $200 offers a nice cushion on top of the unsubsidized sale, providing pure profit. What's the opposite story of resellers taking advantage of cell phone subsidies? Seems to be the 3G iPhone.
Japan to abandon iPod copyright fee
For years, legislators in Japan have wanted a portion of the price of a digital recording device (up to 3%) to go to recording companies, songwriters and artists. The so-called "iPod tax" has met opposition from electronics manufacturers, as you could imagine. However, it looks like it's not going to happen. A group failed to create an agreement yet again this week, prompting official Masafumi Kiyota to say that "...there is virtually no hope for getting the legislation passed." Certainly good news for consumers.Other electronic devices like minidisk players and DVD recorders have a copyright tax built into the price tag in Japan. The logic (if you want to call it that) is that consumers will use these devices to illegally acquire copyrighted material, so why not have them pay for it before hand, as a preemptive strike? Sounds to me like someone has contempt for their customers.
GDAA mate, Aussie developer group chief quitting
Greg Bondar, CEO of the Game Developers' Association of Australia (GDAA), will quit his post on July 12. Bondar tells Gamespot AU that he's moving on to "pursue other opportunities" after being with the organization for 18 months.The GDAA has been the group pushing for Aussie game developers to receive the 40% tax break currently bestowed upon their film-making brethren. The group is trying to prevent the continent from being left behind as various nations and states lure game developers with yummy tax breaks. Mmmmmm, tax breaks.
Wisconsin offers 25 percent tax break for game devs
Here's a little known fact about Wisconsin: Did you know that it's unlawful to run a bar in the state unless you have at least six fish hanging on the wall? And if this didn't sell you on the virtues of the Badger State, frankly get off our lawn. Unless, of course, you're a game developer with an interest in settling down in Wisconsin, as the state has announced that it now offers devs a 25 percent tax rebate just for calling it home.The move, which also includes businesses in the film and television industries, echoes similar initiatives by states such as Georgia and others to lure game developers across their borders. Wisconsin is already home to a handful of notable studios, including Marvel Ultimate Alliance dev Raven Software and Prey's Human Head, though it will be interesting to see if this sizable tax break, along with an additional 15 percent credit for "infrastructure development," will be enough to convince devs to put down roots in America's Dairyland.