UPDATED: UK Governement Tackles Canadian Games Tax Breaks

UPDATE: Responding to the suggestion by the head of the French gaming industry body, APOM, that there is no merit in pursuing an investigation of Canadian games industry tax breaks, a Department for Culture, Media & Sport representative has told SPOnG:




According to reports in the Canadian press, the UK government has "formally initiated" an investigation into Canadian tax breaks. The investigation is reportedly being launched via the European Commission.

"The U.K. government is concerned that state aid offered to computer games companies by a number of federal institutions in Canada may not be compatible with World Trade Organization principles", the Ministry of Culture, Media and Sport said^†.

Canadian tax breaks for games companies vary from province to province, with the highest being in Manitoba, where 45% of labour costs can be written off. It is Quebec, with its 37.5% labour tax break, that has attracted the most attention, however. Eidos recently said that it would relocate a large chunk of its operations to Montreal, the home of Ubisoft's biggest studio.

This isn't the first time the UK government has spoken about challenging Canadian games tax breaks. Culture Minister, Margaret Hodge, suggested that the government could make such a move back in October.

According to Guillaume de Fondaumière, president of APOM (France's games trade body) and co-CEO of developer, Quantic Dream, the UK government's move will likely prove ineffectual. "We (APOM) and French government services had looked a few years ago at the opportunity to challenge Canada's incentives with WTO. Our conclusion was such a challenge would lead nowhere. Canada's tax breaks are more or less aligned with WTO policies", he said‡.

"The UK should rather join forces with the France (which made the first move in the 'tax break direction' a few weeks ago) as well as other Euro countries understanding the imperial need to save a key industry and convince the European Commission to widen its horizon on the subject and allow ALL games to benefit from tax credits and other incentives."

The European Commission gave the French government the go ahead to introduce its own tax credit scheme last year.

SPOnG has contacted the UK government for a reaction to this assertion and confirmation that it has escalated its investigation of Canadian tax breaks. No comment was available at the time of press.

De Fondaumière isn't the only one to suggest the UK government should be more actively supporting the games industry. Concerned 3D animator, Dan Spence, has started a petition to the Prime Minister to this effect. (You can sign it here.)

Similarly, ELSPA, (the British Entertainment & Leisure Software Publishers Association), has expressed disappointment at the government's failure to include tax credits for games companies in the recent budget.

^{Sources: †The Vancouver Sun, ‡Develop}