Ukie responds to announcement of European Commission tax breaks investigation

We are disappointed with the decision to investigate the proposed UK production tax credit scheme but still confident of getting scheme implemented.

We have responded to today’s announcement from the European Commission (EC) that the EC will be undertaking an in-depth investigation into the proposed production tax credit scheme for UK games and interactive entertainment businesses.

This means that the EC have some specific questions that they need answering which the UK Government responds to. This is common practice throughout the rest of the EU, and the film industry was subject to a full investigation when the plans for their tax credits were first submitted to the Commission.

The Commission is questioning whether there is an obvious market failure in the UK games industry. In particular they are looking at whether:

  • aid is necessary to stimulate the production of such games;
  • limiting expenditure for the tax relief to goods or services 'used or consumed' in the UK would be discriminatory;
  • offering this type of aid would fuel a subsidy race between Member States; and
  • the proposed cultural test ensures that the aid supports only games with cultural content without leading to undue distortions of competition.

We need to respond to the EC with more evidence that there is a market failure for the UK games industry. So we need all games businesses to tell us:

  • games that have been cancelled and that you believe would have happened if the tax credit had been in place
  • games you have made that had to be made "less British" in their look and feel, tone, or narrative in order to get a greenlight
  • what % of your work is currently work for hire and what % would you estimate it to be if the tax credit was in place?

Please contact us with your evidence or leave your comments on Facebook.
Commenting on the announcement Ukie CEO, Dr Jo Twist said: “We are extremely disappointed that the European Commission has decided to open an in-depth investigation into production tax credits for the UK games industry. We believe this support is crucial in opening up the opportunity for developers to make culturally British and European games. We are still confident of having the scheme introduced and are fully committed to having it in place as soon as possible.”

”A similar investigation into the French games tax relief system was successful but this took 12 months to conclude.”

“The UK games industry needs tax breaks in place in order to be able to compete with other territories and to be able to grow to its full potential. One of the key questions that the Commission is asking is whether there is an obvious market failure in the UK games industry. We shall be gathering evidence to show that British and European games, being created by British games businesses, are not being made in significant enough numbers for the UK industry to compete globally.”

“It is vital that games businesses help to supply evidence as part of this investigation. We will be reaching out to all games businesses and working with TIGA to make sure that the industry speaks with one voice on this crucial issue.”

“We are in constant dialogue with UK Government and know that they remain 100% committed to the introduction of the reliefs and shall be working together to respond to the Commission’s questions.”

Andy Payne Chairman of Mastertronic and CEO of AppyNation also commented, saying: “Running a games developer in the UK, this news is incredibly disappointing to me. Tax breaks will be a vital component in allowing the UK games industry to compete on a level playing field and helping it to once again grow to its full potential. We must all work together to make sure that this situation is resolved as quickly as possible for the sake of the UK games development sector.”