UK TAX BREAKS | BETA “The Treasury will be concerned about tax
avoidance, so that must be addressed – but I think the film credit works extremely well, so the industry should look to the film tax credit and how that works. The games industry needs to look at that and say ‘how can we take that model and apply it to our industry?’. The latest version of that is four or five years old and works incredibly well as it has prior approval from the treasury, and that avoids those tax avoidance schemes and means all projects that benefit get prior approval from the treasury. There are cultural tests in there which stipulate production in the UK. It’s important people understand there is a cultural test element and that they can start making games with a British flavour.” In the meantime, there is a good chance that a games industry working group will be established to shape the proposal for the EU. European Commission approval is needed for any law like this, as they otherwise have strict rules on state aid. So, taking cues from the Film Tax Break, the
group will write up a comprehensive proposal that covers a range of elements; What is the legal definition of a game? What kind of studios should benefit proportionally from the tax break pool? Under what grounds should the DCMS apply for a derogation to the EU treaty on state aid?
This is a great first step and should put the UK in a
stronger position to compete with other countries.
Bobby Kotick, Activision
THE CULTURAL QUESTION Debate rages as to whether or not the cultural element will play a serious part in defining the new tax break. At the time of going to press, the cultural
“As major investors in UK TV, film and video games production we welcome all measures aimed at supporting the UK to further develop and sustain its strong position in these key creative sectors.” Ubisoft was likewise delighted - it has built
many of its studios in regions with Government subsidies, and has a UK studio ripe for expansion. “We’re delighted that the Government has announced its intention today to provide production tax credits for the UK games industry,” said Rob Cooper, UK MD. “This gives recognition to the wealth of
creative development talent in the UK and will allow publishers to continue to support UK studios. The UK has always been a leading market in gaming, and with this support from the Government, we can continue to be competitive within the global landscape.” And then there’s the big one – Bobby Kotick,
the Activision Blizzard boss who publicly dressed down the coalition Government for its initial U-turn and hinted that his entire UK operation could move elsewhere in Europe.
DEVELOP-ONLINE.NET “This is a great first step and should put the
UK in a stronger position to compete with other countries offering incentives for video games production,” he said. “The UK is an important centre for development talent, employing 9,000 people in the video games sector, and anything that promotes further investment should be welcomed.”
HOW DOES THE CONSULTATION PERIOD WORK? The proposed tax break would be part of the 2013 Budget – it’s not a process that happens overnight, and takes 12 months to implement. In the meantime the Government will open a consultation period to allow the games industry to help shape the resulting subsidy. Vaizey says that, broadly, this is to “put a
realistic case to Government and have to show how the tax credit can work in practical ways”. But he points to the already existing Film
Tax Credit as the direction to take. Proposals from trade bodies and other
lobbyists have cited the Film Tax Break as the model to adopt too.
exemption with regards to games no longer actually exists in France or Europe. Back in 2007 game tax breaks were recognised as an exception to state aid until 2012, paving the way for France’s own games tax break, but earlier this year the ruling expired. A reintroduction of the measure in France must be approved by Wouter Pieke, the European Commission Directorate General for Competition, but discussions between Pieke and French officials are thought to have tangled over several issues. The European Games Developer Federation is hopeful for a resolution. Develop has heard there is a chance this will not materialise. But if it does, the sometimes thorny issue of what makes a game cultural is raised. In separate instances legal firm Olswang and trade body TIGA have submitted proposals that outline how a game could be subject to a ‘cultural test’ to prove how British it is. Points would be awarded for various aspects such as…
- Is the video game based on locations or
historical events in Europe/Britain, or material or activities (a film, a book, an artistic work, a sport)
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