MS Candidate University of South Australia May 22, 2008
This paper analyzes the issue of earning real world money from virtual world and the role of taxation on that income. Many virtual worlds have their own internal trade based economy similar to real world economy with its own currency acting as a medium of exchange. A huge virtual money flow in MMOG, so a virtual economic flow can be exist which can effect the real world economy in terms of tax pay. And the gamer integrate real cash into the virtual world through an internal currency exchange system. It illustrate the issues of taxes in virtual games recognizing income could be established by regulators at the point when in-game transaction occurs and at the time of converting game assets into real world money. The tax in MMOG is calculated from gross income of gamers when they receive anything of economic value, whether in the form of cash, property or services. MMOG tax can be collected by voluntary reporting and Internal Revenue Services (IRS) initiative and participating from different nation belongs to their country’s tax rules and regulation. Keyword: MMOEG, MMORPG, real money trade (RMT), virtual world, multi-user, linden dollar, internal revenue service (IRS), second life, linden lab, virtual economy, taxation, Terms of Service ( TOS )
Social network collaborate a group of people to form virtual community which trends to virtual world other than real world where members are sharing resources, skills, profile, contacts, fun and doing business to achieve its mission goal in virtual networks. Online virtual games are one of the most interesting innovations in the area of social network. These games are based on multi-user domains (MUDs) and they have utilized the internet as a new gaming forum that allows people to link up and play together. In Massively Multiplayer Online Economic Game (MMOEG) or Missilery Online Role Playing Game (MMORPG), players from different sites can easily participate and obtain items that can have significant world value to other players. And Second life is one of the good examples of Massively Multiplayer Economic Game where people can trade huge money by selling and buying virtual property. And the virtual world is not isolated from the real world as the exchange of virtual goods and services for real life money has become a fundamental part of the virtual world experience. Virtual World & Ownership
considerable number of people which is not a game rather then collaboration, community development and innovation inside the enterprise. According to the Prentice (2007) virtual worlds are neither games nor a parallel universe and every avatar acts as a real person. However, virtual world includes MMORPG such as World of Warcraft and on the other hand Second Life is one of the most popular MMOEG which was released by Linden Lab, a private company based in San Francisco, California in 2003. It’s a three dimensional forum that enables users to interact with each other through motional avatars.
Figure 1. Virtual demo
Virtual world is a computer simulated environment in which social network users interact with each other via graphical representation. Virtual worlds have captured the imagination of a
This platform creates a sophisticated level of social network interactivities combined with general aspects of virtual reality. And there is no
fee to join in Second Life but it takes money for Linden dollars from participants which can be exchanged for real money rate of approximately 300 Linden dollars to one US dollar. However, according to Erriksson and Grill (2005) the participants can create avatars and may own property and game money but at the end of the day when the game is over, the property and the money itself is returned to the owner of the board game. As a result the values and ownership is based on the time...