Taxes
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US Senate passes internet sales tax bill, faces a stiff fight in House
The debate over taxing out-of-state online sales in the US has been raging for years, but there are signs that the often messy saga is finally winding to a close... well, maybe. The Senate just voted 69-27 in favor of the Marketplace Fairness Act, a bill that would make internet retailers collect out-of-state sales taxes that Americans are already obligated to pay, but rarely do under a current system that puts the onus on (frequently unaware) buyers. Don't be too hasty in cheering or jeering the apparent conclusion, however. The bill's next stop is the House of Representatives, and the reception may be decidedly colder this time around. The act could be submitted to the President this year if it does survive the gauntlet, although a six-month buffer would likely push any tax changes to 2014 if the bill is ever signed into law. [Image credit: Scrumshus, Wikipedia]
UK Interactive Entertainment CEO defends games as culture before EU tax investigation
Last week the European Commission announced it would kick off an "in-depth investigation" into proposed UK tax relief for video game developers, and UK Interactive Entertainment's Jo Twist wasn't too pleased by the news. This week the non-profit's CEO calls on the UK games industry to send a clear message to the European Commission, that games are culturally and economically relevant."[Games] generate culture, and are purveyors of culture in their own right," Twist writes. "They generate emotion and opinions, and the way they do that is through story, through experiences, and a huge diversity of innovative mechanics ... We have to show why there are not as many culturally British games being made as there could be and how the credit would help address this."The UK games tax relief plan calls on developers to pass a "cultural test" before receiving financial aid, incentivizing games starring British lead characters, in British locations or made by a local British team. The EU Commission worries the tax relief could negatively impact competition."The market for developing video games is dynamic and commercially promising," said EU Commission VP of Competition Policy Joaquin Almunia. "It is not clear whether the taxpayer should be subsidizing this activity. Such subsidies could even distort competition."Twist notes that the EU Commission investigated both the UK film tax credit and French video game tax system, both of which were eventually approved, setting a historical precedent to accept the UK's proposal. Further information on UKIE's defense can be found on its Facebook page.
Daily Update for April 3, 2013
It's the TUAW Daily Update, your source for Apple news in a convenient audio format. You'll get all the top Apple stories of the day in three to five minutes for a quick review of what's happening in the Apple world. You can listen to today's Apple stories by clicking the inline player (requires Flash) or the non-Flash link below. To subscribe to the podcast for daily listening through iTunes, click here. No Flash? Click here to listen. Subscribe via RSS
UK video game tax relief hinges on passing this 'cultural test'
The UK government outlined a "cultural test" that video games developed in the region must meet for the studio to qualify for tax relief, as part of the industry overhaul begun earlier this year. A game must earn 16 points to receive the tax break, with points awarded for such criteria as being "set in the United Kingdom or another EEA state," which includes all countries of the European Union, plus Iceland, Liechtenstein and Norway. The studio gets four points if the game stars two of three lead characters "from the United Kingdom or another EEA state or from an undetermined location," or it depicts "a British story."If at least half of the game's development is completed in the UK, studios can earn three points, while a "qualifying" project leader, script writer, composer, artist, programmer, designer and department head earn one point each. If at least half of the entire team qualifies as a legitimate UK operation, the studio gets another point. The tax code is like a game in itself.For example, if a studio in the UK (3 points) with all local staff (8 points) creates a game about a time-traveling doctor in a bowtie (4 points) as he journeys around Liverpool (4 points), Hufflepuff wins the House Cup. See? Easy.Peruse the entire cultural test below.
UKIE wants 30% games industry tax break, UK begins tax plan scrutiny
UKIE, a trade group for the entertainment industry in the UK, joined UK gaming trade association TIGA in calling for a tax relief flat rate of 30 percent across the industry, in the hopes of stimulating the UK's game development business. In March, UK chancellor George Osborne pledged to "turn Britain into Europe's technology centre, starting with digital content," by extending the country's film tax breaks to the TV, animation and gaming industries.Yesterday was the deadline for suggestions to the UK government on how the gaming tax breaks should be handled. TIGA previously suggested the 30 percent flat rate, or an alternative tiered rebate giving 25 percent relief to projects costing £250,000 ($400,000) or more.After consulting with more than 200 UK companies, UKIE proposed relief should extend to the entire industry, covering indies, large studios and new companies established by parties overseas -- all with a 30 percent relief rate, regardless of budget. UKIE included relief for DLC and post-launch support in its proposal.The tax relief is poised to begin in April, pending parliamentary approval and a round of summaries, scrutiny by tax professionals and consultation. Edge has a round-up of the whole process here.
Amazon to start collecting sales tax in New Jersey beginning July of next year
Taxes. Taxes. Taxes. That's what you folks living within the Garden State will have to pay on Amazon purchases starting July 2013. The recent news -- which is likely to cause some of you to throw a minor temper tantrum -- comes shortly after Jeff Bezos & Co. settled with the Texas government to also begin collecting sales tax in that state. Similar to the Lone Star deal, though, Amazon's agreed to create about 1,500 full-time jobs by building a couple of distribution centers in New Jersey -- and let's face it, job creation is always good news. Sorry, but looks like the Jersey Shore crew will have to spend a couple extra bucks the next time they place an order for that weekly stock of tanning lotion.
Apple defends its tax practices in the New York Times
A recent New York Times article slams Apple for avoiding billions in state and federal taxes using common corporate loopholes. Apple didn't take kindly to this report and has issued a four-paragraph response defending its practices. The Cupertino company says it pays "an enormous amount of taxes which help our local, state and federal governments." Besides paying taxes, Apple also points out that its "among the top creators of American jobs in the past few years." You can read the full response on the New York Times's website. Also of note, Forbes magazine has pointed out that one of the key numbers in the Times story -- Apple's supposed 9.8% effective federal tax rate -- is hooey.
Amazon to collect sales tax, create 2,500 jobs in Texas
If Amazon's been your internet safe haven from the ravages of sales tax, you may want to sit down. As part of a settlement with the great state of Texas, Bezos' baby will start collecting the state's requisite 6.25-percent sales tax on July 1st. The settlement resolves the online retailer's ongoing dispute with the Lone Star state, which claimed that Amazon owed $269 million in back taxes. In addition to taking up collection, Amazon has agreed to create at least 2,500 jobs and invest a minimum of $200 million in capital investments, though it admits no fault, and believes "the assessment was without merit," according to its latest SEC filing. Grouped in with Kansas, Kentucky, New York, North Dakota and Washington, this agreement makes Texas the sixth state to collect sales tax from Amazon -- and California, Nevada and Arizona will join the collection club in due time. Check out the source links below for the Texas Comptroller's official statement and more reading on Amazon's tax agreements across the nation.
Talkcast tonight: Profits, taxes and WWDC at 10 pm ET / 7 pm PT
Another quarter, another blowout. While analysts and pundits imagined that domestic iPhone sales would signal an end to the gravy train, international demand pushed the handset past the 35 million mark and shot AAPL back above the $600 line. Even with the iPad refresh hitting at the end of the quarter, Apple sold almost 12 million of the tablets to get to 67 million total sales in just two years on the market. Apple's developer conference, WWDC, opened up ticket sales this week -- and promptly closed them again a couple of hours later as the event sold out. Some ticket buyers who thought they were good to go found out otherwise when Apple's overzealous group ticket restrictions cancelled their valid orders. Meanwhile, The New York Times has been focusing on Apple as a proxy for all things large and corporate lately, and the beat goes on with today's feature story on how the company uses some... interesting tactics to minimize its tax liability in the US and abroad. We'll discuss the story, and consider whether or not slapping a lowercase "i" into a headline works in favor of -- or against -- solid business journalism. That's our rundown for tonight's Talkcast. We welcome your calls, questions and comments at 10 pm ET, 7 pm PT tonight live on Talkshoe. To participate in the call, you can use the browser-only Talkshoe client, the embedded Facebook app, or download the classic TalkShoe Pro Java client; however, for +5 Interactivity, you should call in. For the web UI, just click the Talkshoe Web button on our profile page at 4 HI/7 PDT/10 pm EDT Sunday. To call in on regular phone or VoIP lines (Viva free weekend minutes!): dial (724) 444-7444 and enter our talkcast ID, 45077 -- during the call, you can request to talk by keying in *8. If you've got a headset or microphone handy on your Mac, you can connect via the free X-Lite or other SIP clients -- basic instructions are here. Skype users with dial-out credit can call in via the service, or use those free iPhone minutes. Talk to you tonight!
Apple makes a tax deal for Prineville, Oregon data center land
We've heard before that Apple plans to build a data center on land it previously purchased in Oregon, but now the Associated Press reports on part of the cost. The company has reportedly agreed to pay US$150,000 per year to local governments, and has signed off on at least 35 jobs. Those jobs will be paid at a rate that's at least 150% of the average wage in the Oregon county. Finally, according to the AP, Apple will have to invest at least $250 million into the data center building itself. In return for all of that, Apple will be exempt on property tax payments for the next 15 years. Whether that will be worth it or not depends on exactly how much they build there, but odds are Apple's accountants aren't that worried. The company already paid $5.6 million for the land earlier this year, and it's setting up plans to both build up the infrastructure of the local power company to keep the data center running, as well as a green energy site there on the spot. Oregon is apparently a popular place for data centers like this. Google, Amazon, and Facebook all have similar sites in the surrounding area. [via MacRumors]
Is Apple avoiding taxes in the UK?
The Daily Mail is reporting that Apple only paid £10 million in UK corporation tax for the last fiscal year, even though the country earned £6 billion in the UK. The paper has also accused Amazon and Google of UK tax avoidance as well. The report also discusses Apple's operations in Ireland, where the corporate tax is half that of the UK, and a Caribbean-based location. Apple has previously lobbied for a one-year "tax holiday" in the US, hoping to bring some of its overseas cash stockpile back to the US.
Five apps to help you file your taxes (updated)
With only a few weeks before taxes are due -- the federal deadline is on April 17, and many states have followed suit -- plenty of Americans are scrambling to file before the clock ticks away. We've gone and found five apps that will help you make Tax Day, and waiting for that refund, a bit easier. TurboTax SnapTax (Free, but has in-app purchases) This app from Intuit allows those who are eligible to file with the simple 1040-EZ to do their taxes straight from the iPhone. Snap a photo of your W-2, answer the questions and hit the button to zip your return to the IRS. While the app itself is free, actually filing a return costs $24.99. TurboTax 2011 (Free, but has in-app purchases) Those who use TurboTax for their taxes can now do so via the iPad. The app itself is a free download, but like all of Intuit's products, filing the return will cost you. Those who have used TurboTax in the past will find the interface familiar. Filing returns starts at $49.99 for federal taxes and $39.99 for state. H&R Block Mobile (Free) This app from H&R Block allows you to check your Federal return status. It also allows you to create checklists for doing your taxes and estimate your refund, and it provides access to a tax help center that allows you to look up questions, define tax terms and more. And, if you throw up your hands in defeat, the app also provides directions to the closest H&R Block location. If you're a 1040EZ filer, you can use H&R Block at Home 1040EZ Tax to file for free. Receipts Pro - Expense Tracking with Reports ($4.99) Receipts Pro keeps track of all your business expenses as you make them so you're not struggling to recall them when doing your taxes. The app lets you take photos of your receipts and organize them into groups or categories. Custom fields can be used to attach tax or payment information to each receipt. An overview graph helps you keep track of spending and a reporting feature lets you print up a detailed list of expenses. IRS2Go (Free) Finally, we have the app developed by the IRS itself. Like other apps, it will allow you to check refund status. You can sign up to get tax tips emailed to you, how to contact the IRS, and you can follow the IRS Twitter feed from it. However, it does not provide access to tax code, forms or the sort of tools found in Tax Central. Still, if you feel more comfortable using the official app to check your refund status rather than Intuit or H&R Block, this app is not a bad way to go. [Kelly Hodgkins contributed to this post; updated to reflect separate apps for H&R Block]
UK finally implementing game tax relief
The UK government announced today it would finally provide tax relief for game developers, which comes as welcome news to the region's struggling scene. The relief will take the form of £15 million in 2013-14, with £35 million in 2014-15."Our research shows that Games Tax Relief should generate and safeguard: 4,661 direct and indirect jobs; £188 million in investment expenditure by studios; increase the games development sector's contribution to UK gross domestic product by £283 million; generate £172 million in new and protected tax receipts to Her Majesty's Treasury, and could cost just £96 million over five years," TIGA CEO Dr. Richard Wilson stated today.With some luck, the relief will help slow the "brain drain" occurring in the UK games industry following numerous studio closures.Wilson also said, "Tax breaks for games production will ensure that the UK remains at the forefront of video game development."That's a nice dream, but current tax break champion Canada and many others are ahead of the UK by a mile ... er, kilometer. [Pixelbliss via Shutterstock]
EU could lose tax breaks for game developers, threatens talent exodus
The European Union provides us a small-scale glimpse into the potential functions of a truly global society -- and more recently, a global society in crisis. The unified currency of the EU, the Euro, was on the brink of collapse recently and all of its member countries are still running damage control.Now, France in particular is facing another monetary hurdle, as its tax incentive for game development has expired and casued "genuine concern" the EU may not renew the exception that would reinstate it. State aid is normally forbidden under EU law, but in some cases it is allowed -- without an exception, game-development tax incentives would be banned in all EU countries, including France and the UK, Develop reports.French developer Quantic Dream (Heavy Rain) said that if the tax break is not reinstated it would relocate its operations to Canada, which does offer incentives for development companies, Develop adds. And according to TIGA, The UK's game-development workforce -- which sees no tax breaks -- fell 10 percent between 2008 and 2011, with 41 percent of its workers relocating overseas to countries such as Canada.
Brazil gives tax exemption to Foxconn, iPad production may follow
Not very long after Tim Cook said that Apple sees a "huge opportunity" in Brazil, it turns out the company's CEO may have had more than sales on his mind. Brazil has granted iPad assembler Foxconn special exemptions from Brazilian excise and other taxes, clearing the way for iPad production to begin in South American factories. For several months in 2011 it looked as though iPad production might begin at Foxconn-owned factories in Brazil, but the proposed US$12 billion deal fell through in September when Brazil failed to meet Foxconn's expectations for tax breaks. Brazilian officials characterized Foxconn's demands as "crazy," but there appears to have been a change of mind. It remains to be seen how Foxconn's secondary worry of Brazil's lack of skilled labor will be addressed. Mercado reports the tax exemption applies to "tablets with touch screens, no keyboard and weighing less than 750 grams" -- at 600 grams, the iPad 2 comes in comfortably below that limit, as do several competitors' products. "Accessories, cables, power supplies and manuals that are related to the tablets" also fall under the exemption rules. Our Brazilian readers have said that high local prices for Apple's gear haven't stymied demand for the devices. If produced locally, Brazilian prices for the iPad could fall considerably since import duties will no longer be levied against them, and that could potentially send Brazilian demand for the iPad into the stratosphere. With a population of 200 million, Brazil represents a great opportunity for Apple to expand its operations in an area of the globe that consumer electronics companies haven't traditionally viewed as a high priority market.
Ireland planning to double its game industry jobs
Ireland is planning to double its game industry employment numbers by 2014, targeting 4,500 jobs from the current estimate of 2,000. The country, which has been dealing with a financial crisis, and acting as a corporate tax haven as the same time, is looking to back sustained growth in digital creative industries. Develop lays out the six initiatives the country has to grow in the sector. "As a pioneering sector within the wider digital economy, the games sector is dynamic, innovative and exciting," said Richard Bruton, the minister for jobs, enterprise and innovation. "What is apparent is that Ireland already has a number of strengths on which we can build success for the future and that will differentiate its offering internationally." Ireland is already off to a good start, with the recent opening of BioWare Ireland (pictured), a 200-employee customer service center expected to double in size.
NYT: Video-game companies take lucrative advantage of US tax code, especially EA
If the United States tax code were cheese, it would be more Swiss than American -- tax breaks and incentives for software development, research and technological advancement were established to promote an intellectual advantage in the US, and video-game companies are in a unique position to take full advantage of federal funding, especially EA, The New York Times reports. EA boasts $1.2 billion in global profits over the past five years -- which is technically a net loss, after deferred revenue, executive-stock-option deductions and other accounting necessities, including a payout of $98 million, cash, in taxes worldwide. The US federal tax rate on any company is 35 percent, but that's before the creative accounting. In 2004, EA hired Glen Kohl, formerly an employee of the Treasury Department under President Clinton, to make the most of its tax incentivies. Kohl has since lobbied for federal tax breaks on domestic production and established offshore subsidiaries in low-tax countries. EA now has 50 offshore subsidiaries in countries such as Bermuda, Singapore and Mauritius, and holds $1.3 billion in offshore funds that won't be taxed unless brought into the US. EA spokesman Jeff Brown justified EA's monetary exportation as a consequence of running an international business:
Louisiana enhancing its tax incentives for game developers
Since 2005, Louisiana has offered game developers and other software producers one of the most attractive deals in the US: the Digital Media Tax Credit, which affords applicable tech companies a 25 percent tax credit and 35 percent payroll tax credit. That deal is getting even sweeter in the coming months, as Governor Bobby Jindal has signed a bill which allows developers to take that credit in cold, hard cash, provided it's not all soaked up by their tax liability. Not many developers are taking advantage of the boot-shape state's hospitality, though EA's facility on the LSU campus is sure to benefit from the expansion, as will Gameloft's soon-to-be-opened New Orleans studio.
Game developers bullish about Australian tax break bill
Game Developers Association of Australia CEO Tony Reed is, as you might imagine, a big fan of the $1.9 billion tax break for video game research and development that's making its way through the nation's government. Speaking to Gamespot, Reed explained, "No matter how big or small a studio is, this is the kind of thing that will encourage development. It is designed with our own independence, creativity, and innovation in mind." He added that his organization harbors a lofty goal: To "prepare Australia to become one of the top three territories in the world for game development within the next five years." The country has a ways to go before they can recover from the games industry's 50 percent reduction in workforce, but five years is an awfully long time in the tech world. And, it should go without saying, almost-two billion dollars is a lot of dollars.
Mass. bill proposes stepping up state's game dev incentives
With EA set to break ground for a new facility at LSU, and Gameloft considering similar "endeavors" in New Orleans, Louisiana legislatures have got to be feeling good about the allure of the state's Digital Interactive Media Credit. 1500 miles to the northeast, Massachusetts is considering enacting similar tax incentives for game developers through a bill filed earlier this year by Rep. Vincent Pedone. As the bill, affectionately known as "H03301," continues to kick around the Mass. Legislature, representatives of specialty tax services provider Alliantgroup take a look at its proposed "rewards" on Develop. While subject to alteration, the current draft of the bill proposes significant tax credits for both labor- and production-based costs incurred by large and small game-related companies alike, including a potential credit for a "promotional logo of the commonwealth of Massachusetts" placed on a game. In other words, stamp a game with a "Made in Massachusetts" logo (as Alliantgroup dubs it) and a company could earn up to a $75,000 annual credit under the bill's current stipulations. Of course, the bill has yet to be put to a vote by state lawmakers, who can ill afford to sleep on it for long if they want to keep pace in the "quest" to win over the game industry. In addition to Louisiana, Alliantgroup identifies 16 other "game-friendly" states, including neighboring Rhode Island, which last year lured away Curt Shilling's 38 Studios from Mass. ["Made in Massachusetts" logo source: Massachusetts Bay Trading Co, Inc.]
