TIGA confident UK Games Tax Relief can overcome EU roadblock

CEO Wilson 'disappointed, but not surprised'

TIGA confident UK Games Tax Relief can overcome EU roadblock
In March 2012, the UK's Chancellor of the Exchequer George Osborne announced the formation of a new games development tax break as part of his 2012 Budget.

After years of lobbying from developers, publishers and the UK's trade associations, it seemed as though the introduction of Games Tax Relief was imminent.

The measures – which provide 25 percent tax relief on up to 80 percent of a game's production budget – were to be introduced on 1 April.

But the European Commission did not approve the measures in time for this to go ahead, and has since announced that it will conduct an "in-depth investigation" into the proposed relief.

"At this stage, the Commission doubts that the aid is necessary," said the announcement. Joaquín Almunia, the Commission's VP in charge of competition policy further claimed that "such subsidies could even distort competition."

At the very least, this investigation means a delay to Games Tax Relief. At worst, it leaves the scheme's future in doubt.

To find out more, we spoke with Dr Richard Wilson, who's acted as a vocal advocate for Games Tax Relief since becoming CEO of TIGA in 2008.

Pocket Gamer: What's your reaction to the Commission's assertions and the doubts it raises over the need for Games Tax Relief?

Richard Wilson: I'm disappointed, but not surprised, that the EU Commission has decided to launch an investigation into the case for Games Tax Relief.

The investigation will inevitably delay the introduction of Games Tax Relief.

If the Commission's investigation is protracted, then the under-production of culturally British video games will continue and investment and job creation in the UK's games industry will be endangered.

However, I am convinced that TIGA and the UK Government can allay the EU Commission's concerns. Over the last five years TIGA has assembled evidence that demonstrates that Games Tax Relief is beneficial, necessary, and proportionate.

Beneficial because it stimulates investment; necessary because it addresses the under-supply of culturally British video games; proportionate because the level of tax relief accessible by British video games studios will be a modest proportion of the overall expenditure on video games development in the UK.

We now intend to strengthen this evidence in order to persuade the Commission.

Contrary to Joaquin Almunia's assertion, Games Tax Relief will not distort competition within the European Union. France has operated a video Games Tax Relief since 2008 and there is no evidence that it has distorted competition within the internal market.

The UK's Games Tax Relief will not distort competition within the EU either. This is because the Relief is restricted to the production of culturally British video games and also because the level of the Relief is modest.

Given the Commission's statements, do you remain confident that the tax relief measures will go through as planned?

I am supremely confident that TIGA will articulate a forceful and persuasive argument for Games Tax Relief to the EU Commission and that ultimately this vital measure will be enacted.

Both the French Video Games Tax Relief and the UK's Film Tax Relief were subject to an investigation by the EU Commission before they were introduced, so it is not unexpected that the Commission has also decided to investigate the grounds for Games Tax Relief.

The UK Government remains committed to Games Tax Relief and still plans to introduce it in the current Finance Bill. So we are in a strong position.

However, it is critically important that developers and publishers provide the evidence that TIGA and the Government needs in order to make a successful case to the EU Commission.

TIGA has been a key player in lobbying for these measures. Personally, how do you feel about this roadblock?

I have always believed that TIGA will deliver Games Tax Relief for the UK games development and digital publishing community.

Victory belongs to the persevering. I have been campaigning for Games Tax Relief for five years and indeed TIGA is the only organisation to have consistently argued for Games Tax Relief, in public and in private. Over this time, TIGA confronted – and overcame – many roadblocks.

TIGA convinced the last Labour Government to introduce Games Tax Relief in its final Budget in March 2010.

TIGA further persuaded four political parties – Conservative, Liberal Democrats, Labour, and the Scottish National Party – to publicly support Games Tax Relief during the 2010 General Election.

When the new Coalition Government dropped Games Tax Relief in the June 2010 Budget, some commentators suggested that TIGA's campaign for Games Tax Relief was hopeless. Yet TIGA never gave up.

We continued to wage a vigorous campaign for the introduction of Games Tax Relief and finally achieved success in the March 2012 Budget. The EU Commission investigation is just one more in a long line of roadblocks which TIGA will surmount.

What can TIGA, and the UK's development community, do to convince the Commission of the need for games tax relief?

TIGA intends to advance a compelling, convincing and constructive case for Games Tax Relief to the EU Commission. We also plan to work with our friends, particularly in Government and in Parliament to deliver Games Tax Relief.

Developers and publishers can help us achieve this goal by providing us with information about games that have been cancelled but which might have gone ahead if GTR had existed, or games that have been 'Americanised' and have lost elements of their 'Britishness'.

We also want to hear about platforms and business areas where the UK suffers in comparison to other countries. Drop me an email at richard[dot]wilson[at]tiga[dot]org.

TIGA aims to gather the evidence from the development and digital publishing sector and present a coherent case for GTR to the EU Commission.

The Commission claims that Games Tax Relief could spark a "subsidy race." Do you believe this is a possibility? After all, aren't these measures a response to the tax relief offered in Canada and other countries?

No. TIGA's proposed Games Tax Relief is an entirely positive measure.

We need Games Tax Relief because there is a market failure in the supply of culturally British video games. Many games are made overseas because of the tax credits that are available and so many culturally British elements are lost or replaced by those of the nation making the games.

Of the games that are still being made in the UK they are increasingly being made with an international or Americanised theme. Games Tax Relief overcomes this problem.

Games Tax Relief should enable more studios to self-publish and so keep a British feel in their games.

Additionally, Games Tax Relief will reduce the cost of games development in the UK and so will incentivise global publishers to develop games with a British quality.
Thanks to Richard for his time.
Staff Writer's news editor 2012-2013