On July 1st, China introduced a 6% tax levy on domain names, and this is good news.
Some might wonder, how would an act of “Communist Capitalism” such as this be “good news” for the Chinese domain investors?
Very simple.
According to this chart sheet in Chinese, domain name sales are categorized as “Sales of Intangible Assets” with a tax rate of 6% – that’s an official classification of domains as property.
Chinese domain investor and premium assets broker, George Hong of Guta, shared his thoughts on this move:
“I guess we can say that domain Names are officially recognized as Intangible Assets by Chinese government. Maybe in the near future, people can use domain names as collaterals to borrow money from banks.”
This act by the China State Administration of Taxation should therefore be embraced by the Chinese domain investors as an acknowledgement of their industry.
Instead of flipping domains for small change, China’s savvy investors will now be able to form companies that invest in domain names long term. That, along with the understanding of how domain theft and “black rice domains” are affecting investments, should help propel China’s domain market forward.
Hat tip: George Hong of Guta.com.
So the net value of domain names just dropped by 6%.
Does need some explanation. Is it a sales tax or is it a tax on tradeable profits.