SHOULD THE ACTIVITIES CARRIED OUT WITHIN THE METAVERSE PAY TAXES?

 People will have to pay for their activity in the metaverse

Technology advances by leaps and bounds and forces authorities to catch up with the legislation. This is the case of taxes and the so-called "metaverse".

This concept, widespread in recent months after the decision of the founder of Facebook, Mark Zuckerberg, to promote this new form of augmented reality, refers to the so-called "next generation of the Internet", which describes an immersive and multisensory experience in the applied use of various devices and technological developments on the internet. In simple, a world parallel to physical reality as it is known today.

Said universe implies the performance of commercial activities that could eventually be subject to taxes. This is how a document from the Inter-American Center of Tax Administrations (CIAT) analyzes it.

"In a broader sense, the metaverse may not only refer to virtual worlds, but to the multidimensional experiences of use and application of the internet as a whole, especially the spectrum that combines web 2.0, augmented reality, third-party technology dimension and virtual reality", points out the author of the analysis Alfredo Collosa.

In the document, Collosa emphasizes that certain normal operations in the physical world will eventually be carried out in the metaverse, which may give rise to a possible tax obligation.

"Activities that currently take place in isolated environments will eventually take place in a single metaverse, such as: buying avatar outfits and accessories online, buying digital land and building virtual houses, engaging in a virtual social experience , shopping in virtual malls through immersive commerce, using virtual classrooms to experience immersive learning, buying digital art, collectibles, and assets, interacting with digital humans to onboard employees, customer service, sales, and other business interactions," points out the analysis.

This is because it is an independent virtual economy, enabled by digital currencies and non-fungible tokens (NFT), where technologies such as blockchain are "protagonists", says the Argentine professional.

Earn more than in the physical world

The analysis published by CIAT emphasizes that in the metaverse people obtain cryptocurrencies in virtual worlds and sell them in exchange for fiduciary currency. "In fact, in some cases they're making thousands or even millions more than they would in the real world," he notes.

Thus, he exemplifies with a case: in December, a parcel of virtual real estate in The SandBox was sold for US $ 4.3 million to an Atari developer.

"On the other hand, NFT sales reached some US$25 billion in 2021, according to data from the market tracker DappRadar, and all forecasts indicate that they will continue to rise," says the professional.

A first approach, says Collosa, is to analyze the taxation of NFTs, which opens the door to other questions in tax matters.

"It will be necessary to define how the rental or sale of virtual real estate, or the creation of digital content, will be taxed, how the VAT treatment will be and what will be the place of provision of services, and what the jurisdictional link, for example, for purposes of define residence, source, application of international treaties, etc.", emphasizes the analysis, which in any case points to each State or jurisdiction defining its potential regulatory framework, always within a framework of multilateral cooperation.

Along these lines, the author suggests that the use of available technology will be key to determining the tax treatment of operations carried out in the multiverse.

"Current and emerging technologies can combat fraud by bringing taxes closer to transactions in what are known as continuous transaction controls. For example, through smart contracts based on blockchain it would be possible to automate part of the collection of taxes," he concludes. .