TaxCorporate TaxUK and Canada in tax battle over gaming industry

UK and Canada in tax battle over gaming industry

The UK government has launched an investigation into the tax credits offered by the Canadian government to the gaming industry

The UK government is calling on the World Trade Organisation to look into the
legality of tax incentives in Canada given to the video and gaming industry.

A formal investigation was launched by the UK’s Ministry of Culture, Media
and Sport which wants the European Commission to call in the WTO to look at the
credits being offered, online gaming site,
develop,
reported.

A department spokesperson: ‘The UK government is concerned that state aid
offered to computer games companies by a number of federal institutions in
Canada may not be compatible with the World Trade Organisation principles’.

UK businesses believe Canadian subsidies are unfair, drawing European game
developers because of tax breaks which allow tax write-offs of up to 45% of
labour costs, a 37.5% tax credit on wages as well as a 30% credit for small
companies and 20% for companies with annual revenues above $20m (£10m).

Margaret Hodge, Culture, Creative Industries & Tourism minister, said
these credits contravene EU rules.

Guillaume de Fondaumière, head of French trade association APOM, says the
move is a mistake.

‘The UK should rather join forces with the France (which made the first move
in the ‘tax break direction’ a few weeks ago) as well as other Euro countries
understanding the imperial need to save a key industry and convince the European
Commission to widen its horizon on the subject and allow all games to benefit
from tax credits and other incentives,’ he said.

Further reading:

UK
Government ‘declares trade war’ on Canada

UK
launches trade war over video game industry

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