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Local video game developers are relieved after a tax credit was added to the provincial budget

B.C. games industry still anxious over tax credits

B.C. game developers are relieved that the provincial government is looking to renew a lucrative tax credit that was due to run…

By Konstantine Roccas , in Business , on October 27, 2014 Tags: , , , , ,

B.C. game developers are relieved that the provincial government is looking to renew a lucrative tax credit that was due to run out in less than a year.

But they remain concerned that higher subsidies in Quebec and Ontario may lure developers away.

Rockstar Games Vancouver closed in 2012 and merged with the Toronto Branch
Rockstar Games Vancouver closed in 2012 and relocated to Ontario

“We lose way too many people to the so-called ‘brain drain’ and these tax credits were invented specifically to combat that,” said Andy Moore, head of Vancouver-based Radial Games.

“Quebec and Ontario currently have lucrative incentive programs for the entertainment software sector, so the thought of losing these credits was frightening.”

Thousands of jobs

The Liberal Government introduced the Interactive Digital Media Credit (IDMTC) in 2010 in response to the global economic meltdown in 2008, which cost B.C. game developers close to 1500 jobs.

The tax is set to expire in September 2015. It is included in the budget proposal through to 2016/2017 but still needs to be formally approved.

According to industry figures from the Entertainment Software Association of Canada, in 2012 the B.C games sector was worth $568 million and was responsible for 5150 jobs.

[pullquote align=right]While B.C. has natural advantages, the government needs to ensure we remain competitive with other provinces to continue to attract foreign capital[/pullquote]

DigiBC, a group that lobbies for digital media in the province, has been pushing for the renewal and expansion of the tax credit but still sees work to be done.

“Though the digital media industry is doing well, we could be growing at a rate higher than 20 per cent. Before this tax credit, we lost 1500 jobs so losing it would have killed the growth we’ve had over the past five years,” said Howard Donaldson, President of DigiBC.

“While B.C. has natural advantages, the government needs to ensure we remain competitive with other provinces to continue to attract foreign capital.”

Competing for talent

Quebec and Ontario’s incentive programs currently offer tax refunds of 37.5 per cent and 35 to 40 per cent respectively. They are the province’s key competitors when it comes to attracting talent.

The tax credit in B.C. covers 17.5 per cent of labour costs in comparison.

The opposition NDP is calling for more help from the government to keep jobs and developers in the province.

“The digital media industry offers a high likelihood of long term investment and the government needs to be aware of this so that BC doesn’t lose the business like we did with the film industry,” said George Heyman, B.C. NDP opposition spokesman for technology.

The B.C. Finance Ministry was not available for comment.