Metaverse is a new normal and the world is welcoming the idea with delight. Virtual space is ready to take the world to the next level of advancement. Apart from offering an outstanding online experience to the communities, Metaverse also has the potential to benefit government revenues. Christine Kim, a Harvard legal Scholar revealed the same in a research paper emphasizing on Metaverse taxation.
Why is Christine Kim so interested in the Metaverse wealth ecosystem?
“Treating Metaverse as a laboratory for experiment and taxing the Metaverse wealth would be favorable to legislative bodies”, stated Kim in a research paper. Christine Kim, a law professor at Yeshiva University argued for a tax on the Metaverse income and treating the virtual space as a laboratory for experiments with cutting-edge policy.
Metaverse is a 3D virtual space powered by advanced technologies including virtual reality (VR), augmented reality (AR), Artificial Intelligence (AI), and blockchain technology. The platform will allow individuals to play games, interact with communities, learn, and socialize. The idea of Metaverse is rapidly gaining popularity, hitting $120 Billion in income. The passive income and wealth sourced from Metaverse enticed Christine Kim towards the virtual space. The research paper published by Kim declares that not taxing the virtual land may result in the formation of “a tax haven”.
Income and wealth in the virtual space should be subject to immediate taxation as the space allows individuals to build wealth entirely within its environment. Taxing the metaverse wealth and considering the space as a laboratory for experiments would be advantageous for the legislative bodies.
Metaverse taxation offerings
The government should take advantage of the Metaverse’s potential to track records of all digital activities as well as individuals’s wealth. The government has a great opportunity to transform and advance its tax system by tracking and taxing income upon receipt. At an initial stage, the US government can tax upon activities related to realization or engagement in taxable events like withdrawal. However, the income is received in cryptocurrency.
Based on the report of CoinMarketCap, the largest Metaverse token is Internet Computer (ICP), holding the current price of $3.28 with a market cap of $1.45 Billion. Advising the government, Christine Kim also recommended two plausible ways for enforcing tax law in the metaverse. The first method involves individual platforms retaining taxes on behalf of participants. This method is a preference of Kim, assuming to be more beneficial for the US tax system.
Residential taxation is another key suggestion of Kim to the government. Residence taxation and dependency on platforms offering tax information to individuals who would then record and pay their tax obligations is the second piece of advice by Christine Kim.
Taxing the Metaverse offers opportunities for lawmakers even if not interested in Metaverse and Web3 technology.
Christine Kim, a Harvard legal scholar and law professor at Yeshiva University, advised the government to tax the Metaverse wealth. Treating Metaverse as a laboratory for experiments and taxing the income would help the government in advancing the taxation system. Residential taxation and retaining taxes on behalf of participants are two ways suggested by Kim.