China cracks down on virtual cash

Woodger

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Indeed, it means technically that they cannot use any money earned or withdrawn from Entropia to purchase anything other than Entropia in world goods.

However...

I'm sure there will be a loophole and at worst, they will be able to withdraw up to the amount they have put in.

I do however think this will bring a rising number of issues with the chinese gameplay in EU... I think we will see a rising number of people purchasing PEDs or whatever the planet may be, through paypal and getting given the peds in game... should the PED be actually legally accquired then MA would be powerless to stop this... as it is just one avatar giving another avatar perfectly legal peds, and whatever happens out of game, is outside of MA jurisdiction and control... and quite frankly, as far as freedom goes, none of their business...

...However

MA can ban anyone they suspect of doing this, even if the ped are acquired legally, bcos they can do what they want with any account whenever they want, without reason (read the EULA)

the flipside.. is that chinese players wishing to remove peds from game without using the traceable MA system of their account to yours, would be players selling their peds to ordinary players through paypal at a discount so they can withdraw funds to their bank accounts from paypal and thus cover the trace of where the funds came from... if it were me I'd just say I was selling advice to people and thats where my paypal money came from... very easy get arounds for that sort of thing. Technically money laundering... which will bring all sorts of trouble knocking on MA's door...

The hard part will be keeping track of such transactions, as who's to say it's not a friend lending another friend (or soc member) peds...

But i'm sure there will be a loophole somewhere, and if I were MA i'd be looking for that loophole right away, probably something to do with Mindark being a swedish and not a chinese company or something or other....


very interesting tho, I wonder how long before this law is passed in alot of other countries... particularly in those more developed countries like the US and Europe...

Very interesting indeed.... One might even say the sky is falling down for the whole concept of games with real cash economys... or maybe not, depends which other countries eventually enforce this kind of law.
 

SteveAzrael

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very interesting tho, I wonder how long before this law is passed in alot of other countries... particularly in those more developed countries like the US and Europe...

I think Europe/America are more likely to just allow it, and tax it......
 

Woodger

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I think Europe/America are more likely to just allow it, and tax it......

Yes, a very good point mate !

But also this may start to bring problems with people finding workarounds to avoid it... tax evasion so to speak, yet another big mark on the ins and outs of the Entropia RCE....
 

Rotrap

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One of the first digital curriences for micro transactions, digicash, had many of its properties designed with the idea that eventually micro-currencies and governments will have a clash, and I think they were right.
 

Arrun

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......with people finding workarounds to avoid it... tax evasion so to speak, yet another big mark on the ins and outs of the Entropia RCE....

nope, that's 'tax avoidance' - where tax is not payable since it's been avoided for whatever reason and that is quite legal and accepted. (and my accountant is really good at this!)

Tax evasion is where tax is proven to be payable but is deliberately not declared/paid.

....theoretically......
 

Woodger

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nope, that's 'tax avoidance' - where tax is not payable since it's been avoided for whatever reason and that is quite legal and accepted. (and my accountant is really good at this!)

Tax evasion is where tax is proven to be payable but is deliberately not declared/paid.

....theoretically......


true...true.... i should have said people finding illegal ways not to pay it lol
 

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Cash earned in games in China can no longer be spent on real world goods.

First paragraph of the article.

Didn't MA claim EU wasn't a game, but a Universe?

Problem solved.
 

aridash

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Chinese govenment is directly involved in the CRD project, so i really dont think this will impact on MA or EU. the new rule is reported to be to prevent unofficial trading of game currency in the real world, where as MA offers the option to withdraw money through an official channel.
 

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Hmmm off hand I think this would be good for EU, but I’m puzzled why China Government would stop its citizens from making / pulling in money from other countries. Hell they are making a profit and bring more money into the country ; at least the way I see it.

Seems the government is ok with people making money from games but wants them to only spend and use that money in the game; sounds like a perfect match for EU?
 

Rotrap

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First paragraph of the article.

Didn't MA claim EU wasn't a game, but a Universe?

Problem solved.

Depends how Chinese law defines it really. I know I for one am not about to start to try to play semantics with an English news blurb about a law written in Chinese as the only thing to go on.

Hmmm off hand I think this would be good for EU, but I’m puzzled why China Government would stop its citizens from making / pulling in money from other countries. Hell they are making a profit and bring more money into the country ; at least the way I see it.

Seems the government is ok with people making money from games but wants them to only spend and use that money in the game; sounds like a perfect match for EU?

Control, the control of the market for currencies has always been one governments have tried to maintain historically. Entropia would need to lose the peds for real world shops I guess, and then it would work well for them as long as the law did not consider the conversation to to a government issued currency as a form of purchase.
 

Wollongong

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@Rotrap... my post was not 100% serious ;)
 

aia

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nope, that's 'tax avoidance' - where tax is not payable since it's been avoided for whatever reason and that is quite legal and accepted. (and my accountant is really good at this!)

Tax evasion is where tax is proven to be payable but is deliberately not declared/paid.

....theoretically......

In Sweden, if you regularily sell goods for more than ~23000 SEK (approx same in peds), you have to be registered for sales tax/VAT (moms). Also, foreing companies that deal with swedish citizens over a certain amount (50 000 SEK or USD or something?) have to be registered. (The latter rule was added because there was some phone companies that registered themselves in Portugal but was more or less swedish because of lower sales tax, probably aswell as the growing "online market".)

So, someone trading a mod fap to a swedish resident and don't register at Swedish tax authority is probably evading tax, if taking the rules strictly. Sure private persons don't register for sales tax, though question is that if it's a professional player, who lives off PE (for instance high level trader) can be seen as a professional (basically doing it as an unregistered privately run personal company).

In case you wonder, also second hand shops have to pay sales tax/VAT, even those for charity. There is currently an exception (mainly for charity shops) who are open less than 12 hours/week; howeber the EU (European Union) is forcing Sweden to apply full sales tax even on charity shops.
 

WillWren

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Technically in the US you have to pay taxes on any income, ill gotten or not. If you make a prfit in EU and you are a US citizen you should pay taxes on it. The question I think for accountatns and policy makers is when do you pay the taxes? And as what kind of entity?

A bit off topic, but this issue is only going to come up more and more in the coming years.
 
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JingyiDai

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pretty old news, was known for months :) For time to time they will lauch a campagne or do a crack down. It is very normal , dont worry.
The only tax we should worry is the our in-game return rate, those are nasty tax, not some foreign taxes in a galaxy far far away....
 
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i sure hope the politicians in china stop using crack it can bring you down:wise::smoke:
 

chevrons

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I'd say the outcome depends on whether a tax authority accepts MA's EULA for what it states.

The EULA states that participants have no ownership of their PEDs in game.

This leads to the conclusion that deposits are 'Gifts' to MA, and withdrawals are 'Gifts' from MA.

So the Chinese statement boils down to suggesting that its citizens be prevented from receiving 'Gifts' from a company in Sweden.

This literal interpretation of the EULA distinguishes it from RL Trading Profits, because the items sold are in the legal ownership of the trader for the period they are held.

Perhaps withdrawals from EU could be taxed as 'Payments for Services', provided by a participant to MA (as opposed to vice versa)?
 
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One day, the people of China will demand a change of government, It happened before (though it was a bunch of university students) but something similar will happen again.

History repeats itself... eventually ;)

Till then, MA will likely be bending over backwards to please the Chinese. ;)

- Nightwolf
 

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They have a long thin stick for controlling their people, we call it repression. Our government has a short thick stick for controlling their people, we call it tax.

More likely, they seek to address the issue of gold farming, in excess of 85% of world gold farming happens in china, in conditions close to sweat shops.

I'd speculate that China has very little real interest in Entropia. It's currently involved in reaching out to the world with it's primative propaganda, a foray in EU is likely only to be a bilboard for the typical 'look how great china is, look at our great leaders, look at how bad world outside is'.

Don't get me wrong, alot of people dig it and while I might not appreciate it. I do understand the cultural difference, that's lead them to be happier to accept a guiding hand from the government. I just think it's funny, cos if they appreciated the way ham-fisted propaganda will fail to effect the political cynics of western society, they'd probably have given up already.

However, I believe their are opportunities moving forwards, this intended internet censorship program was delayed (cancelled?) at the last moment. Ironically (or maybe intentional) this action makes China look far more developed and 'normal' to the rest of us, than other actions such as industrial growth or the Olymic games.
 

UUUU

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Probably the stereotype of "gold farmer" has become so synonomous with China on a world scale that they feel the need to change their appearance to the rest of the world. Don't think it would affect EU because the direct relationship between cash input and cash output and there isn't really any activity that nets enough without an investment to make it viable on the same scale as non-mentioned games grinding for gold. The recent sweating bug has shown what would happen if a bunch of people spent all their game time doing that.
 
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roughrider

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I'm for the Swedish way of doing it. If the cash is in the game its non taxable. You only pay tax on the amount that you withdraw.
 

aridash

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I think there's a better description of the new law on The Escapist-

http://www.escapistmagazine.com/news/view/92822-China-Hasnt-Banned-Gold-Farming-After-All

To me, it seems like bad news for CRD and, as a result, MA. But, I've never been completely clear on the whole CRD situation.

yes, thats a better interpretation, its not about gold farming. but im not sure it is concerned about people from outside China using virtual money to buy real items from within China.
 

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ok, so I got to wondering how this would effect CRD. I went to http://www.crd.gov.cn/ but it's gone. Then I did a search for any recent news on CRD, but can't find any. Did I miss some news about them folding?
 

aridash

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no mention of CRD in Annual report, so maybe this does have an impact after all.
 

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Chinese govenment is directly involved in the CRD project, so i really dont think this will impact on MA or EU. the new rule is reported to be to prevent unofficial trading of game currency in the real world, where as MA offers the option to withdraw money through an official channel.

This is the correct interpretation.

The ban refers to things such as external gold traders for subscription based games. Your IGE websites and affilates of the world etc.

This ban protects Entropia Universe by not allowing PED to be traded externally on such websites along side the gold for subscription games.

Entropia Universe is the provider of virtual currency and all transactions involving this real world currency in virtual form is contained within the operating boundaries of the service provider.

ie. MindBank will handle all transfers
From the real world USD ---> PED and out again PED --> USD.

China is a horrid market when it comes to MMOs, a good 50% of the gaming population play games solely for the purpose of virtual currency farming and external reselling of this virtual currency. (Usually at a cheaper rate for large quantity, imagine the fraud attempts on credit cards and the such if this were allowed)

The only way to have resolved this problem is through what has been enacted by the Chinese government, which are also the major shareholder of CRD.
 

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I hate the chinese government, they seem to think they rule the people. It's supposed to be the other way round. Wake up Chinese people! Revolt and demand democracy and freedom!
 
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Hmmm off hand I think this would be good for EU, but I’m puzzled why China Government would stop its citizens from making / pulling in money from other countries. Hell they are making a profit and bring more money into the country ; at least the way I see it.

Seems the government is ok with people making money from games but wants them to only spend and use that money in the game; sounds like a perfect match for EU?
No, not really. Most "gold seller" companies are located outisde of china. That being said, most people who profit from gold selling are the companies. These companies only have people who live in china and do the work, but the majority of the profits goes to the company.

A chinese goldfarmer works like 12 hours/days for 80 EUR (in a month!!!). However, for 80 EUR you get like 10.000 World of Warcraft Gold. And this isn't really much. For example a good Mount or item costs 15.000 gold. Some guilds are charing 30.000 Gold to leech people through hard mode instances for meta-achievement (where you get a very fast flying drake as reward).

And a chinese Farmers can do like 5.000-10.000 golds a day (depending if he finds valuable stuff or sales go well). Even an average player who only plays 3-4 hours daily (and do not have to do high-end raid 5 hours every day), can do 1.000-2.000 gold a day, even more (depending on his profession).

That being said, everyone with 2 brain cells can see, that 95% of all money made from farming is not going to china. Even though 80 EUR are enough money to survive for 1 month in china, it's not much compared to the "value" of the chinese workers work. If the chinese would sell the gold by themselves, they could get like 300-800 EUR/months, which is REALLY much money in china. But this is not the case. Chinese are (as usual) threated as slaves by the western countries.

So the ban of the illegal gold selling is probably to preserve this kind of money loss (read: make other countries rich). If only official money exchanges (run by the publishers of that game or plattform is allowed, which is the case and OP's source is simply bad and wrong), then only companies located in china are allowed to exchange the currency to the chinese there. And since the publishers for chinese MMOs are/have to be located in china, they can be taxed for selling virtual currency.

One thing most people don't know, some goldfarmers even advertise in chinese games themselves. Who ever tried the Aion Chinese Beta, would noticed that there was as much gold spam advertising ingame, as there is in other western games (Lineage II, WoW, etc.). This is additionally not possible anymore neither and the goverment can tax it much better.
 
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