South Korea taxing virtual assets, the dreams of children and rainbows

8:43 AM on 07.03.2007   |   Nex

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In an effort to make every one of William Gibson's predictions come true, South Korea has instituted a tax on the sale of virtual goods. Companies like IGE have managed to promote virtual item and currency sales into a cottage industry with annual profits on par with many small countries, and many industry experts saw government sponspored taxation on such sales as an inevitability. The only question that remains now is how long it will be before the IRS creates its own Americanized version of this tax.

There are two possible outcomes available based on this move. The first is that MMO manufacturers are going to feel a huge hit in the number of subscribers they have, and the profitability of the entire industry will drop. That will, in turn, cause fewer developers to throw their hats into the MMO ring, and the oversaturated market will dry up a bit. The big players -- World of Warcraft, Everquest, Lineage -- won't feel much of a sting, but the smaller fish will be sucked into the government-created intake fans.

The second possibility is that this tax will only serve to discourage gold sellers. The farming operations, already running on a razor-thin profit margin, would take a mortal hit from the tax, and the MMO landscape would become devoid of Night Elves with Chinese characters in their name and no social skills. Obviously this is the more desirable possibility, and even if the tax causes a price-hike for MMOs, the filtering out of the undesirable element would be worthwhile to many.