Tax breaks ‘to cost Quebec $118m in 2011’

Quebec’s world-leading tax break initiatives will cost local government CA$117 million ($118m) in 2011, Develop understands.

According to state official sources in Canada, Quebec’s projected tax break investment for 2011 will amount to a $17 million increase on the $100 million spent in 2010.

And in 2009, around CA$80 million was spent, suggesting that the thriving game development region is benefiting from a long-term investment plan that increases by around $20 million each year.

These costs relate to tax credits “for the production of all multimedia”, including other audio-visual companies and projects, the source claimed.

A final, exact figure on how much Quebec is spending on game tax relief has proven difficult to source.

Many of biggest publishers and developers in the west have poured investment into Canada, Quebec in particular, with the region offering tax break credits that reimburse at least 37.5 per cent on production costs.

In an industry where exorbitant development budgets are colliding with narrowing profit margins, the breathing space Canada provides has convinced numerous game companies to open mega-studios in the region.

THQ, for example, recently closed four studios – one in the UK, two in Australia and one in the US. It is now filling up a huge studio in Montreal with a capacity for more than 500 developers.

And Square Enix, a company headquartered in Japan, is now preparing to double the size of its Eidos Montreal studio to fill 700 staff, according to industry speculation.

Ubisoft and EA together employ around 3,000 people in the region.

Officials believe Quebec will benefit from its huge spending by creating a self-sustaining ecosystem of game developers and studios; a global hub that is expected to thrive for decades. The region’s game development sector has grown by around 700 per cent since 2003, according to official documents.

The UK Treasury spends no cash on game tax breaks.