It looks like our neighbors to the east in Turkey aren’t exactly happy about the cash that K2’s Knight Online is rolling in, and want a piece of the action.
The Turkish Telecommunications Directorate (TIB) has recommended to the Ministry of Finance to place a tax on Internet gaming after an investigation allegedly found some discrepancies in the industry. One of Turkey’s largest media outlets, Zaman Instanbul reports that TIB head Fethi Simsek stated that the TIB had been closely monitoring the online gaming sector and decided to warn the Ministry of Finance about a need for a tax.
This investigation also prompted the TIB and the Ministry of the Interior to recommend to the Ministry of Finance a ban on K2’s popular free-to-play, microtransaction based title Knight Online from being played in Internet cafes. K2’s response was to immediately appeal this decision in a Turkish court of law.
Simsek’s investigation revealed that K2 Network’s operations in Turkey have amounted to profits in the $1M per month range in 2008. He also stated that K2’s revenues have steadily increased over the past three years, with 2006 seeing around $4M, and 2007 around the $9M range.
“There are thousands of people becoming addicted to games and companies are earning profits without being taxed,” Simsek told the Anadolu Ajansi news service. Simsek said the game has been popular in Turkey but even though it is now banned at Internet cafes, it is still being played and no taxes apply.
On the other side of the coin, Yusuf Andic from the All Internet Houses Association (TIEV) says that taxing such games is a ‘good move’ he sees that ban on Knight Online as ‘questionable’ as 60 percent of Turkey’s internet gaming takes place in private homes.
So umm. What? There are a coupla things going on here that really raise the wtf flag.
- Assuming that K2 Networks/Gamers First is a legitimate business organization, wouldn’t they be registered with the Turkish Ministry of Finance, and already pay taxes on revenues generated?
- Is Turkey taking a page from the Chinese government’s book, or is there something deeper going on here?
- Mr. Simsek’s statement about the addictive attributes of online games comes out of left field, as if almost snuck in there in a ‘I was instructed to mention addiction’ fashion.
- If Mr. Andic’s numbers are correct (60% of all online gaming being done in a private home), isn’t this ban just a tad discriminatory? How was Knight Online/K2 Networks singled out?
Any way you look at this situation, there seems to be a bit more going on here than just taxes. If Turkey is worried about an addictive culture being formed around online gaming, fair enough, but there are plenty of alternatives to dealing with this issue. Rather than slapping a tax on it, banning a game, and calling it a day, why not take a look at what Korea is doing and position current Turkish players as the developers of tomorrow?
