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China Taxes Real Profits from Virtual World Transactions

TitleChina Taxes Real Profits from Virtual World Transactions
Publication TypeReport
Year of Publication2008
AuthorsZhang, B., Tang D., Tiano J J. R., Gatto J. G., Duranske B., & Esplin B. D.
Series TitleAdvisory, Pillsbury Winthrop Shaw Pittman LLP

China has declared that it will tax profits on transactions involving virtual currency. In response to an inquiry from the Beijing Tax Bureau, China’s State Administration of Taxation issued a “Written Reply on Imposing Individual Income Tax on the Revenue Derived from Online Trade of Virtual Currency by Individuals” on September 28, 2008 (the “Written Reply”). The Written Reply imposes an individual income tax of 20% on income derived from online trade of virtual currency.