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Game Tax Relief Axe Threatens UK Investment

by Robert Lee,, London

05 July 2010

The UK coalition government’s decision to renege on previously planned tax relief for the games publishing industry has sparked an angry reaction from the industry’s major players, who may now rethink future UK investments.

Both coalition parties appeared to back the move to introduce a tax break for games publishers in the UK prior to the May general election, so the decision to scrap this plan has shocked and angered the industry.

Richard Wilson, Chief Executive of Tiga, the industry’s trade association, said: “The UK video games industry is not competing on a level playing field. Our key competitors have tax breaks for video games production. No such tax break exists in the UK. TIGA’s Games Tax Relief would put the UK on a level playing field. If Games Tax Relief is introduced then the UK will be open for business for the crucial knowledge industry of video game development. Games Tax Relief will stimulate investment, business growth and the creation of highly skilled jobs. Without Games Tax Relief, the UK faces a serious risk of losing out on millions of pounds of investment.”

Executives of two of the world’s largest games publishers, Activision Blizzard and Sony, have also reacted to the news. Activision Blizzards’ Chief Executive, Robert Kotick, said that there needed to be an incentive for his company to continue to invest in the UK. “The talent pool in the UK is among the best in the world for what we do. But we really need to see some more incentives," he was quoted as observing by the Financial Times. "We are seeing great incentives in Canada, Singapore and eastern bloc countries”.

Executives at Sony also said that scrapping the planned tax breaks could affect decisions to invest in the UK in future.

The UK is the fifth largest games developer in the world, behind countries like Canada and Singapore. With countries in eastern Europe keen to grab a share of this lucrative market and other countries willing to take advantage of the UK’s decision to go back on their plan to introduce tax breaks, the decision could spell bad news for the industry in the UK.

TAGS: tax | business | tax incentives | commerce | law | corporation tax | Singapore | United Kingdom | e-commerce | Canada | tax breaks

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