TIGA proposes new tax breaks for revitalizing UK games industry

As the UK government prepares its 2012 budget, trade group TIGA (The Independent Games Developers Association) has submitted a report outlining new measures meant to support the growth of local developers and publishers. The report proposes measures that could create 4,661 jobs and contribute £188 million ($285 million) in investments over the next five years for the UK video games industry, which has suffered a decline recently as other countries have offered more competitive tax incentives. TIGA says the UK games industry is "competing on an un-level playing field" due to its lack of tax relief, compared to Canada, France, Singapore, and the U.S, which all offer a variety of tax breaks for game developers and publishers. It points out that while UK's games workforce has shrunk by over 10 percent since 2008, Canada's grew by 33 percent from 2008 to 2010. And 41 percent of jobs lost in UK's games development sector between 2009 and 2011 relocated overseas, mostly to Canada. Thus its new report, A Video Games Tax Relief: An Incentive to Build a Sustainable Video Games Development Sector, proposes ways to help smaller, British-owned studios, and to level the playing field and improve access to financing for game companies. Under TIGA's Games Tax Relief initiative, which it revised to increase the number of eligible developers, if a qualifying studio makes a profit on a game, it would receive a tax break on that profit. If it makes a loss, it could obtain a cash tax credit to reduce that loss. The trade group proposes two rates of Games Tax Relief depending on the production budget: 20 percent for titles with a development budget over £3 million ($4.7 million), and 25 percent for projects with a budget between £50,000 ($78,345) and £3 million. Along with its revised Games Tax Relief, TIGA submitted three new measures for smaller studios and start-ups in its report: a Creative Content Fund, R&D tax credit expansion, and SME (small and medium-sized enterprises) training tax relief. TIGA says the Games Tax Relief would cost £96 million ($151 million) over five years, but it believes it would contribute £283 million ($446 million) to UK's GDP during that period, while generating £172 million ($271 million) in new and protected tax receipts for the government's Treasury department. "The government has an opportunity to back our sector in the March Budget: it must seize the chance," says TIGA CEO Dr. Richard Wilson. The group submitted its report to the UK government's Treasury and Department of Culture, Media, and Sport today.