Why Some Publishers Might Fear UK Games Tax Relief

July 2, 2010 -

At least a few UK publishers may be concerned that any tax incentives invoked for developers could have a trickle down effect and cause problems in other areas of their business.

Develop details the feared repercussions, one of which centers around the “cultural” elements of tax breaks, which could lead to games being classified as audiovisual products—instead of software—possibly leading to a rise in taxes placed on the goods and higher prices for the end user.

The article calls such concerns “routinely rubbished,” but says that, despite that, such worries remain “prevalent across certain industry groups, bodies and companies.”

The apprehension goes back to a 2008 tax relief proposed in France, which was openly opposed by the Interactive Software Federation of Europe (ISFE) over fears of a reclassification of games as AV products.

As Develop further explained:

Sources explain that games are part software, part cultural product – yet ultimately undefined. A cultural tax relief measure could pin games to a category that some publishers link to more taxation, and import and export tax risks.

TIGA had previously stated that games might need to pass a cultural test in order to qualify for tax relief, which would involve “scoring against criteria of European heritage and game locations, languages, innovation, narrative, and location of development and key development staff.”


 
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