South Korea to Tax RMT

July 3rd, 2007 9 Comments

Last June 26, 2007, the South Korean government office called the Korean National Tax Service (which equivalent to the US IRS or the Philippine BIR) has announced that they are imposing a Value Added Tax (VAT) to RMT (Real Money Trading) in online games.

Often called “PHP Trading” here locally, the new rule is summarized as below:

“Sellers who do between 6 and 12 million won/half year in business (USD 13,000 or PHP 637,000) will have VAT auto applied by transaction’s middle-man. Sellers who do more than 12 million won/half year in business will need a business license and will pay the tax by themselves”

Additional details froma im69.com

An official from NTS, Mr Choi said, “NTS would be able to track all transactions for taxation of virtual items – RMT.” Also, he added, “This is not about defining RMT legal/illegal; we don’t see any contradictory facts to Amendment for Game Industry Promoting Law -we are not about to judge if RMT is legal or not”

Interesting thing is game publishers are yet to announce anything of this issue. According to the TOS (Terms of Services) of game publishers, the items and currency which are traded for real money do not belongs to the gamer but to them. So what would happen if the game publisher levy on the items or currency which are involved in RMT?

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It seems that their biggest hurdle is between the specific EULAs and TOTs of individual game publishers and their clients (players). Some games treat RMT as legal while some clamp down on it – harshly, if I may say so myself.

At this moment, I am wondering how the South Korean government will keep an accurate auditing of this secondary market considering the fact that most deals are done offline and under the very noses of publishers and game operators.

The US has already signified an intent to tax big games such as WoW and Second Life. They have recently asked a goverment decision to do a feasibility study on this plan.

Seems to me that the secondary market is growing significantly. I foresee a future where online games will be monetized based on the RMT market and game publishers just getting a legal commission on trades. Sort of ebay meets MMOs.

GM T

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  • http://bloggers-me.blogspot.com Ryan

    Gm T Ot… You have an unclosed italicized tag which made you whole blog post italic.

  • http://blog.gamerster.com mhive

    Are we going to see legal php trading among gamers here in the Philippines ? Actually, I’m doing some studies but I’m not seeing a sign at the moment since most game publishers doesn’t allow it.

  • valfogg

    look on the brightside, if its restrictive enough, it will deter RMT for good.

    skip the taxes, do the time…

  • headtrip

    You can only tax monitored RMT which is close to impossible here in the philppines.

  • http://gmtristan.com GM T

    fixed the darn tag… thanks

    As to RMT, yes, it IS hard to monitor. Trust me… I know it for a fact since most transactions happen outside of the game…

  • http://levin3d.blogspot.com levin3d

    good point on underground transactions, but that exists even IRL, so it’s not the thing that bothers me a lot.

    the thing that bothers me, is that i’m paying taxes for a bunch of 0′s and 1′s? in retrospect, that means i can be a farmer nerd and earn millions of virtual money to pay for my RL taxes (if it’s not happening already). not a very positive society, if ever it becomes a popular job.

    another interesting fact is that game admins can directly affect the virtual economy. indirectly they could affect and control the RMT just by changing, say an item’s stats or droprate. how do you prevent that? monitoring a game server’s settings? imagine GM’s cannot just spawn mobs in town anymore, laws on server settings like spawn rate and drop rate, … paying a high tax because you just picked up a legendary item, getting an affidavit of loss from a lawyer because your shield got lost from a PK kill. otherwise GMs can just spawn stuff, and if xZeny= yPhp, GM’s are goldmines. the gov’t would control the games of course.

    absurd and hazy IMO ATM. i’m very open to new stuff but paying money for virtual items still feel odd to me.

  • http://levin3d.blogspot.com levin3d

    on the “society” i’m talking about,
    imagine this scenario :chinese WoW goldfarmers

    http://www.youtube.com/watch?v=ho5Yxe6UVv4

    kids will not study and hope to be doctors and lawyers, heck not even caregivers or call center agents, a lot will opt to be “professional gamers” hoping their “break” will come … the next epic sword drop. a scary and pathetic scenario, i hope people give the virtual goods model a serious second thought. there are good possibilities out of it , and many ways to earn money off it (i.e. user created content).but many people might see it the wrong way out, to compensate real life– because anybody can be the next millionare, if the rare item drops on the next kill.

  • Blood

    A good way to monitor rmt trades is through map/global chats. Make a list of them then report them to BIR.

    We won’t ban you, we’ll report you to BIR and they’ll come to your door next morning for tax evasion. You’re making money, hell, we’ll make money out of you too. (Just a scenario LOL).

    They’ll make rules about MMOs in the future, sue GM’s for illegal spawning of stuffs LOL.

    Maybe, game publishers would require players to include their TIN when they register for a game(much more like of KSSN) in the future.

    Im not scared of getting my account banned, but I’m going to be afraid if BIR is on my door coming for me for tax evasion

    BIR > Banned account :)

  • valfogg

    small fry rmt’ers wont be affected much.

    however the big time RMT’ers will be thinking twice on making this a career.

    positive point for me.

    even if its instigated by gm or admin, rmt is rmt. and i dont think the BIR would even think twice on having a piece of that pie. they just ask NBI to check the logs and audit.


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