Monday, August 25, 2014

Virtual currency control? That's double taxation

There were recently talks by some governments on enacting controls for virtual currency. Seriously, I think it was said by people who had no idea on what is a virtual currency and they are just looking for ways and means to plug their deficit gap easily.

The reason is very simple. What exactly are virtual currencies? For those who play games, it is very simple and straight forward. It's a currency used within the game for purchases of goods and services. This is not new and has been there since the early days.

What is new however, is the ability to increase your virtual currency within the game by means other than what is available in the game play. How do you increase virtual currency? By means of exchanging real currency with virtual currency.

Therefore, the government officials who are enacting controls are not addressing the root cause of the issue. If the controls are clear and strict on how virtual currency is being represented in the businesses' profit and loss statement, then the virtual currency is already taxed because the businesses would have reported the virtual currency inflow as revenue. If a certain country is being used to evade tax, then that's another matter all together. Don't use that as an excuse to tax virtual currency.

By enacting controls, the fact is that they are trying to double tax the businesses. Seriously... In this day of age, they should have done their research before speaking.

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