In a guest editorial on the UK version of the Huffington Post, TIGA CEO Richard Wilson ask the British government to give the game industry a break ... a tax break.
In a guest editorial on the UK version of the Huffington Post, TIGA CEO Richard Wilson ask the British government to give the game industry a break ... a tax break.
The New Jersey Star-Ledger newspaper has a rather strongly-worded editorial about what they see as EA's over-manipulation of the United States Tax code. The op-ed piece, a response to the New York Times piece on Sunday that basically outed EA for its practices, calls on the U.S. government to end "unfair tax breaks" for big corporations and to offer those incentives to smaller, more-deserving start-ups.
While Amazon might be on the precipice of usurping legislation passed earlier this year by the state of California with a voter referendum this November, lawmakers are on the attack. The New York Times chronicles the fight going on in California in this article, which is interesting because it pits traditional retail in the state against online retailers.
UK video game industry trade group TIGA said today that high technology businesses in the region were at risk of a "brain drain and skill shortages," complicated and compounded by the existence of tax breaks in other countries. The group has long sought tax breaks and incentives for the video game industry, but the financial downturn and austerity measures in the UK forced the government to abandon any measures that were on the table at the time.
UK video game industry trade group TIGA proposed today that the UK's Coalition Government should open the Small Firms R&D Tax Credit to promote "a high technology recovery and job creation in high technology industries." TIGA made the comments in response to a "consultation exercise" by HM Treasury on the R&D tax credits.
Members of Ontario's "Technology Corridor" attended Gamescom in Cologne, Germany to show their support for the culture, work ethic and incentives the Canadian region provides to developers. Over the past two years, Canada's gaming industry has expanded 11 percent annually and is forecasted to grow 17 percent in each of the next two years. Executives from the Ontario Technology Corridor were at Gamescom to demonstrate the province's "winning combination" of talent and tax credits.
Texas wants more video game companies creating jobs in the state, so in an effort to make the state a more enticing location, the Texas Film Commission announced plans to increase incentives for the gaming industry to a level equivalent to what is currently given to film and television projects. Under the new rules, video game companies will be able to apply for grants that will give back up to 15 percent "of eligible in-state spending paid to Texas residents." This is a five percent increase over previous incentives.
On Monday Texas Governor (and presumed future presidential candidate) Rick Perry spoke at a press conference at EA’s BioWare Austin campus. The Governor, along with top executives of Electronic Arts confirmed that the company plans to expand operations in Austin - and in the process - adding 300 future jobs in the area. EA plans to expand its EA Sports division in the region and will hire 150 full-time positions, along with an additional 150 "contract workers."
During the official announcement Monday, Gov. Rick Perry said that Texas is "the perfect place" for video game development to thrive.
"'If it’s in the game, it’s in the game,' and right now Texas is where the game is being played," Perry told the press in attendance. "Much like the video gaming industry, our state is built on the foundation of competition."
A war is brewing in California (and beyond) between traditional retail and online retailers on sales tax. For years politicians said they would not tax the internet, but a recent change in laws has made it so that Amazon.com has to collect sales tax from any affiliate doing business in the state. While traditional brick-and-mortar retailers applauded this change (they see it as leveling an uneven playing field) online retailers are, to turn a phrase, pissed off. Among other efforts, Amazon.com is seeking to rally anti-tax Americans by proposing a voter referendum in California to overturn the new state law.
Vincent Scheurer of the London-based law firm Sarassin LLP passed us a note to let everyone know that he will be talking about game industry tax breaks in the UK at Develop. He will be presenting a talk called "Who’s Afraid of Games Tax Relief?" at the Develop conference in Brighton next week.
"This talk will consider, amongst other things, the arguments for and against games tax relief, together with an analysis of the lobbying from within the games industry which has recently been disclosed via the Freedom of Information Act," Scheurer wrote in an email to GamePolitics.
Scheurer's talk will commence at 4.30pm on Wednesday, July 20. Anyone with a free Expo pass may attend the talk. Scheurer says that he expects a "lively debate on the pros and cons of games tax relief."
You can find out more about Scheurer and his work by visiting his firm's web site.
Louisiana Governor Bobby Jindal has signed a bill into law that improves the state's existing tax credits for the entertainment industry - which includes game developers. The addendum to the state's Digital Media Tax Credit will soon offer game developers doing business in Louisiana benefits as a refundable credit rather than a transferable credit. This allows those that are eligible for it to receive a cash rebate if the credit amount ends up being more than the outstanding tax liability for the year. Of course, the law still gives game developers a 25 percent tax credit on software production in the state and a 35 percent credit for state payroll taxes devoted to software development.
Louisiana policy makers say that these tax credits have been "instrumental" in attracting large companies into the state. For example, EA recently announced plans for an expansion of its game testing facility on the LSU campus.
UK video game industry trade organization TIGA issued a warning today that the video games industry in the region continues to experience a "brain drain of skilled development staff." TIGA said that this warning is based on the results of a new survey of 104 UK games businesses which showed that 20 percent of respondents had lost staff to foreign countries over the previous 12 months.
Many of those highly skilled workers have been lost to Canada because companies there can afford to hire and commit funds to research and development due to generous government tax breaks and incentives.. The Entertainment Software Association of Canada recently said that Canada's industry has been "successful in attracting investment and skilled personnel from jurisdictions like the United Kingdom.."
Game Developers Association of Australia predicts that in five year's time Australia will be one of the top game development territories in the world. Tony Reed, CEO of the Game Developers Association of Australia, credits the future benefits of the Australian Government's proposed research and development tax credits.
The new A$1.8 billion ($1.89 billion) research and development tax credit legislation will give developers a 45 percent refundable tax credit. The credit is meant for companies that have a turnover of less than A$20 million, a requirement that many Australian game development studios fall into. Reed says that this new tax credit bill will help the local video game industry become one of the top three game development territories in the world and he hopes this can be achieved in the next five years. Australian studios have to register with the government to apply for the tax credit and are required to show proof of research and development.
California has told out-of-state online retailers to start collecting sales tax for customers residing in the state Beginning July 1. This includes Amazon.com, Overstock.com, and GameStop.com. Beginning Friday this new requirement for retailers takes effect, along with a 1-percentage-point drop in the tax. The new tax collection scheme is projected to raise $317 million a year in new state and local government revenue.
Besides the slight cost to California customers, there are other adverse effects for companies connected with Amazon and similar retailers. Amazon and online retailer Overstock.com have reportedly told thousands of California Internet marketing affiliates that they will stop paying commissions for referrals of click-through customers. This is due to the fact that the new requirement applies only to online sellers based out of state that have a connection to California, such as workers, warehouses or offices.
Pennsylvania state senator Daylin Leach wants to give the video game industry a substantial tax credit to do business in the state, and he's pushing a bill that will provide the cash. Yesterday he introduced a bill that would give videogame companies in the state a 25 percent tax credit. Pennsylvania Senate Bill 700 calls for $20 million in tax benefits to be dedicated annually to videogame projects where at least 60 percent of the expenses are within the state. While Leach is the sponsor of the bill, the Senator has the support of seven other senators, who are all members of the minority Democratic party.
UK video game industry trade group TIGA today issued a statement supporting MP Jim McGovern's call on the Creative Industries Minister to review the issue of Games Tax Relief "as a matter of priority." The MP made his comments yesterday in Parliament. McGovern raised the issue in Culture, Media and Sport questions in the Westminster Parliament with the Creative Industries Minister, Ed Vaizey MP. Obviously TIGA supports tax incentives for the videogame industry.
"I discussed future Government support for the creative industries—including the video games sector—with the Chancellor of the Exchequer in the development of the plan for growth which was published alongside Budget 2011," said Edward Vaizey. "The plan for growth sets out the specific actions that we are taking to tackle major barriers to growth in the creative industries and to create the right conditions for creative businesses to flourish."
The Irish government is seriously considering bringing tax breaks to the video game industry in the country, and UK industry trade group Tiga is obviously pleased. Irish Culture Minister Jimmy Deenihan spoke of the video game sector in Ireland as “an enormous global industry with great potential and benefit for job creation" during discussions in the Oireachtas, the Irish National Parliament. A development tax credit would certainly create jobs, which is important no matter what you believe about games.
The conversation among Irish government leaders is also getting praise from Tiga:
A bill passed by the California State Assembly on Monday aims to help California collect more than $1 billion in taxes from online retailers such as Amazon.com.
Assemblyman Charles Calderon, a Whittier Democrat, claims that the new legislation doesn't impose a new sales tax, but extends one that California should already have been enforcing. The bill, AB155, passed by a vote of 47-16, with the support of one GOP lawmaker. Now it has to pass in the Senate to become law in the state. The question for Californians that work for retailers like Amazon.com is how this might affect their future. If the tax burden is too much, maybe Amazon will simply go to another state where the tax situation is more tenable.
Most Republican lawmakers rejected the bill because they said it would drive businesses out of California, get the state entangled in Internet regulation, and force the state to defend the law in the courts.
UK games industry trade group TIGA announced this morning that it has formed a partnership with the European Games Developer Federation (EGDF) to lobby the European Parliament for "improved access to finance for the video game industry." The EGDF has published a Report (Game Development and Digital Growth) which makes a series of recommendations for the European Commission and Members of the European Parliament. TIGA, along with other EDGF members, are pushing several game industry-related proposals to European policy makers in Brussels today.
Those proposals, according to TIGA's press announcement, include the following:
- Recognize video games as a form of cultural expression and make them eligible in all member states for public funding, as is the case with a growing number of non-European countries.
Jason Della Rocca, the former IGDA boss and founder of Perimeter Partners, says that the video game industry needs to start thinking globally and stop worrying about local and regional advantages such as tax breaks. The elephant in the room was Canada's tax breaks and how various territories in the Great White North are pealing studios away from the United Kingdom.
Speaking to GameIndustry.biz at the Nordic Game Festival earlier this month, Della Rocca talked at length about tax-breaks and why they are such a small part of a larger eco-system. Della Rocca thinks that chasing tax breaks alone is a waste of energy.
British video game industry trade group UKIE announced today that it has signed a three-year deal with research & development tax credit firm Jumpstart, giving members access to the company's services at reduced rates. UKIE members will also be able to get free advice about how research and development tax credits benefit their businesses through an exclusive UKIE help line.
"I welcome this new partnership between UKIE and Jumpstart, not only as a UKIE board member but also as the MD of my own business Mastertronic," said UKIE chairman and MD Andy Payne.
"Mastertronic has recently worked with Jumpstart, to maximize our R&D tax break revenue and I personally recommend that all UKIE members make use of the excellent service that Jumpstart provide," he added.
Developers could get a decent 25 percent tax credit on production cost if their products bear a "Made in Massachusetts" logo. According to data provided to Develop by a tax specialist firm, any developer making less $1 million would be eligible for the 35 percent payroll credit. The savings would not be transferred to individuals, but to studio accounts. In other words, if the bill were to be passed, Massachusetts studios could attract better talent with bigger wages.
The information comes from a new Develop feature that taps two executives from specialty tax services provider Alliantgroup, who details the benefits of the bill. Alliantgroup managing director Dean Zerbe and senior associate Angelique Garcia said that the proposed tax breaks for video game studios would turn Massachusetts into a "safe haven" for games studios.
Viacom has managed to generate a tax benefit of approximately $115 million dollars with the sale of Rock Band creator Harmonix Music Systems, according to a filing with the Securities and Exchange Commission. When Viacom sold the developer for $49.99 late last year, it was assumed by most in the media that it had done so in order to reap a major tax benefit for closing a sale by the end of 2010.
Of the $115 million, the company expects $45 million to be realized as a cash refund on previously paid taxes, with the remaining $70 million available to offset future taxes.
Speaking of its litigation with Harmonix, the company said it would "vigorously defend" itself and that it believes that the plaintiffs' position "is without merit."
Viacom acquired Harmonix in 2006 for $175 million.
Jeremy Hunt, Secretary of State for Culture, Olympics, Media and Sport, claims that the much lobbied for tax relief for the UK games industry is "constantly under review." His comments were in response to a question from the Conservative MP for Folkestone & Hythe, Damian Collins.
UK games industry trade group Tiga welcomed Hunt's comments. Tiga CEO Richard Wilson said the following:
"Whilst, we were delighted that the government made changes to the R&D tax credits which we campaigned for in last week's Budget, the introduction of TIGA's Games Tax Relief is the one measure which would really power the UK video games sector forward," he said.
UK culture secretary Jeremy Hunt knows that the Canadian government is leading his country's game developers away like the pied piper, with lucrative tax deals and incentives. Speaking to The Guardian, Hunt said that his country needs to provide similar incentives to keep developers in the country and entice other developers into the country.
"We need to offer the video game industry a package as financially competitive as Canada," Hunt told The Guardian. "I don't know if [a tax break] was the right way to go."
His comments come on the heels of last week's UK budget, which sweetened the pot for game developers with expanded research and development tax credits, but no tax breaks.
According to a Market Watch report, Farmville maker Zynga is seeking a tax break from the city of San Francisco to keep its offices open there. The social game developer said that it is "encouraged" by ongoing negotiations with local government over the future of its San Francisco headquarters. Market Watch claims that Zynga recently threatened to leave the city if it did not receive tax exemptions similar to those recently given to Twitter.
A spokesperson for the company admitted to GameIndustry.biz that it is engaged in "serious discussions" with city officials, though it declined to comment further.
Zynga moved into its current location in September of last year and has space for around 2000 employees at the site, according to GI.biz.
Retailers have been gunning for amazon.com for a long time and have tried in the past to use political muscle to "put them on a level playing field." When I say "level playing field," what that translates to in the eyes of retailers is "force them to pay state sales tax." Retailers have lamented that it is unfair that they have to make their customers pay sales tax while Amazon does not.
Now brick-and-mortar retailers have a new weapon to take on Amazon - the Alliance for Main Street Fairness. The group is pushing hard to change sales-tax laws in more than a dozen states including Texas and California. Before the group was associated with smaller, local businesses. Now it has the backing of retailers like Target, Best Buy Co., Home Depot, Sears, and Wal-Mart.
Square-Enix plans to open a new studio with over a hundred employees in 2012, somewhere in Canada. The maker of Final Fantasy is reportedly negotiating with the governments of Vancouver, Toronto and Montreal. Whichever location offers the best tax incentives package will get a new Square Enix Studio that expects to employ over one-hundred new employees. Square Enix already has a studio in Montreal - which it acquired when it bought Eidos in 2009. But that doesn't mean Square Enix is giving the edge to that locale:
UK trade group Tiga has announced that it has established a new division to support the growing legions of casual and social game developers in the region. The group that represents the UK's game development industry says that the new division can help studios network, develop strategic partnerships, identify trends in the market and offer discounts on software and tools when possible.
The group has also opened a ‘Casual Games Committee’, designed to "support companies creating games of all formats with production budgets between £10,000 and £300,000." Tiga added that this move is a response to “exponential growth in casual gaming platforms" in the region. Tiga members working on a casual game can apply to join, as long as their game's budget is within the previously stated guidelines.
UK games industry trade group TIGA today published a new report called "Powering a high technology recovery: proposals for improving R&D tax credits," which continues to urge the government to improve the research and development tax credit to better support the interactive entertainment industry.
The report focuses on how the R&D tax credits system can be improved for the UK games industry. TIGA says that its proposals for the R&D tax credits would "deliver 60 - 75 percent more value to games studios than the current R&D tax credit regime." This, it says would enable studios to invest more in R&D, generate and retain new IP, and hire more development staff.
TIGA offers the following key proposals: