TIGA outlines UK's Games Tax Relief, calls for 30% flat rate

TIGA, the UK games industry's trade association, outlined its recommendations for Games Tax Relief to the British government today. Following the government's backing earlier this year for tax relief support (as provided in Canada, France, and the US) TIGA called for a 30% flat rate to save the nation's struggling games industry.

TIGA also suggested an alternative of tiered rebate, with 30% for projects costing less than £250,000 (just under $400,000), and 25% for those costing more. TIGA's proposal includes recommendations of post-release costs being covered, eligibility for educational games, and support for free-to-play games and those based on in-game advertising.

TIGA believes the proposed model can bring more than 4,500 jobs to the UK games industry over the next five years, and increase its returns by nearly $0.5 billion.

The news follows the recent demise of Sony Liverpool, one of the UK's longest serving game studios. The government will now consider TIGA's proposal, with the aim of introducing GTR from April 2013, subject to European Commission approval.

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TIGA PRESS RELEASES
TIGA sets out design principles for Games Tax Relief
Publish Date: Monday 3rd September 2012
TIGA, the trade association representing the UK games industry, today published its response to the Government's Consultation on Creative Sector Tax Reliefs.

TIGA recommended that the new Games Tax Relief (GTR) design should be underpinned by the principles of: � Helping small budget games as well as large projects
� A flat rate of relief of 30 per cent on eligible projects
� Relief for post-release costs
� Eligibility for educational games

Dr Richard Wilson, TIGA CEO, said:

"TIGA aims to strengthen the UK video games sector and to ensure that the industry supports the wider economic recovery. If GTR is designed to support both small budget games and larger projects, provides a significant level of relief and incentivises continuous content creation, then we can achieve these objectives.

"Games are increasingly being developed as a service, with a large amount of the content being created and released post-launch, and the game evolving over time. So it is important that studios are able to claim relief on costs arising after the release of a game.

"TIGA strongly welcomes the growing political consensus in favour of GTR and the recognition by the UK Coalition Government of the economic and cultural importance of the video games industry. A well designed Games Tax Relief will power the industry forward and contribute to economic growth."

TIGA's Survey
Over 100 developers and digital publishers were polled

89% of respondents were opposed to a minimum spend threshold
52% of respondents prefer the idea of a uniform rate of relief
70% of respondents believe that debugging and maintenance costs that are incurred after the release of a game should qualify for relief
98% of respondents thought that educational video games should be eligible for Games Tax Relief

The Design of Games Tax Relief

TIGA believes Games Tax Relief should:

� Be based on the Film Tax Relief
� Support educational games
� Support games based on in-game advertising and free-to-play business models
� Be in effect from pre-production to post-launch support
� Incentivise content creation post release – DLC, patches, updates, new content, modifications to game play and debugging
� Not require a minimum spend threshold

Cultural test

Due to the European Union, Games Tax Relief can only be implemented if it is accompanied by a cultural test. TIGA firmly believes that video games can be cultural products. They can reflect the society in which they are created. British video games developers can: generate iconic characters; create innovative new video games genres, narratives, art, music and use humour, science and learning innovations as vehicles for education.

The Government has not yet formally published its consultation document on the cultural test. However, TIGA has emphasised to the Government that the more developers and digital publishers can be given a degree of certainty as to whether a game will qualify in advance, the more effective Games Tax Relief will be.

Rates of Relief

TIGA is seeking a single level of relief of 30 per cent. Alternatively, the Government could introduce two tiered rates of relief:

� 30 per cent for projects up to £250K
� 25 per cent for projects over 250K

The case for Games Tax Relief

The facts Canada, France, Singapore & USA have tax relief for games production
No tax break exist in UK
UK sector declined by 10% since 2008
UK studio investment has fallen by £47m since 2008
41 per cent of the jobs lost to the UK dev sector have relocated overseas since 2009
Games being designed in UK but completed in countries with tax relief
Fewer titles with British cultural themes being produced

The opportunity

The proposed Games Tax Relief will enable UK video games developers and digital publishers over the next five years to:

� Boost investment and job creation
� Secure over 4,660 direct and indirect highly skilled jobs
� Invest £188m in jobs and games development
� Increase the games development sector's contribution to UK GDP by £283m
� Contribute £172m to HM Treasury

Notes to editors:

About TIGA:
TIGA is the trade association representing the UK's games industry. The majority of our members are either independent games developers or in-house publisher owned developers. We also have games publishers, outsourcing companies, technology businesses and universities amongst our membership. Since 2010, TIGA has won 11 business awards and has been nominated a finalist for 9 other awards. In 2010 TIGA won two business awards including 'Trade Association of the Year' from the Trade Association Forum.

In 2011, TIGA won eight business awards including 'Trade Association of the Year' from the Trade Association Forum, 'Outstanding Organisation' from the Chartered Management Institute and two Global Business Excellence Awards, including 'Outstanding Marketing Campaign'. Richard Wilson won the 'Leadership Award' from the Trade Association Forum and the 'Outstanding Leader' award from the Chartered Management Institute. In 2012, Richard Wilson won the IoD's East of England Director of the Year Award. TIGA is an Investors in People organisation.

TIGA's vision is to make the UK the best place in the world to do games business. We focus on three sets of activities: political representation, generating media coverage and developing services that enhance the competitiveness of our members. This means that TIGA members are effectively represented in the corridors of power, their voice is heard in the media and they receive benefits that make a material difference to their businesses, including a reduction in costs and improved commercial opportunities.

For further information, please contact Dr Richard Wilson, TIGA CEO on: 07875 939 643, or email: richard.wilson@tiga.org.