Last year China banned the sale of virtual currency in an effort to shut down “gold farmers” — businesses that hire young Chinese to play video games all day and sell the proceeds (in the form of game currency or magic items) on eBay (EBAY) or online. The Chinese government did nothing to enforce its own ban, so it remains to be seen whether Beijing follows up with its latest edict: Gamers who sell virtual goods for a profit will be taxed at 20% of the proceeds, the same rate applied to profits on real estate or other transactions.
In December 2005 the New York Times estimated 100,000 Chinese were employed full-time in the gold farming industry, and consulting group iResearch says the virtual currency trade is a $1.4 billion dollar industry growing at 15 to 20% a year.
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