There is 'clear and evident market failure' in production of culturally British games
UK industry trade body UKIE has asked the European Commission for urgency in approving UK games tax relief in response to its investigation on the scheme.
In April the EU cast doubt over UK tax breaks when it launched an investigation into the proposals, claiming there “is no obvious market failure” in the industry, and that such games are produced even without state aid.
In UKIE’s response however, the trade organisation claimed there was a “clear and evident market failure” in the production of culturally British or European games made by UK developers.
According to the trade body, a significant proportion of developers who could be eligible for tax breaks are currently working for hire for non-European studios on games which don’t reflect regional themes.
It also explained the issue was exasperated year on year as fewer culturally European games become available, dissuading potential investors in the market from investing in games based on European and UK culture, creating a "vicious circle" of decline.
UKIE believes that games tax breaks can encourage investment and give developers time to focus on more culturally European games. It stated that eventually a more successful industry backed by tax breaks in the near future could remove the need for state intervention in the long-term.
“The UK needs tax credits to make sure that we can reverse the current trend for games being made with non-European cultural themes,” said UKIE CEO Jo Twist.
“As the audience for games increases, it is important that developers of all sizes can make commercial decisions in a financially competitive tax system. Fewer people are making games in the UK, which means that fewer games are being made which advocate our sense of humour, our creativity and our identity as European citizens. We need to have tax credits introduced as soon as possible”.
UKIE Chairman and Chair of Mastertronic Andy Payne added: “It has never been clearer that the UK needs these tax breaks. Video games have huge cultural reach and are now pushing creative boundaries like no other medium. But unfortunately too many games are now created without British or European themes, a problem that will continue to exist unless we get tax credits introduced.
"Without tax credit there will be fewer developers operating in the UK, which means fewer British games being made. The case made by UKIE clearly spells this out to the EC and we urge them to get them in place before the situation gets any worse.”
You can find UKIE's full response here.
Tiga also recently issue their response to the UK games tax relief investigation by the European Commission, highlighting four key arguments as to why implementing the initiative is necessary for the UK game industry.
You can read our rundown of Tiga’s response here.