ELSPA warned Govt of cultural tax break concerns

The following is the full statement from UKIE on its current position on tax breaks:

UKIE director general, Michael Rawlinson said: "UKIE has always supported video games specific tax breaks. To show its ongoing commitment, UKIE agreed to a joint working group with TIGA back in August. This group is re-examining the evidence required to present to Government that would support the case for the introduction of tax breaks, whist also looking at other means of financially supporting the video games and interactive entertainment industry. We look forward to TIGA engaging with us more in the coming months."

"UKIE has the responsibility for serving the interests of the full breadth of the video games and interactive entertainment industry. For the games industry to thrive all parts of the value chain need to be successful. That's why the wider implications of our policy agenda are always carefully considered."

"In our submission to government in Autumn 2009, ELSPA (as UKIE was then) once again fully supported a call for tax breaks. As part of a wider consideration of the issue, ELSPA asked for clarification on whether the classification of video games as cultural products (which would be necessary to obtain tax breaks under European state aid rules) would have any knock-on effect on the World Trade Organisation's (WTO) trade classification of video games as software."

"UKIE was concerned that the any re-classification required to allow tax breaks might change the status of video games from software and bring it within the scope of audio-visual and media classification, which might bring unintended and seriously damaging consequences for the whole industry."

"Since that time, at a meeting with the Department for Business, Innovations and Skills, in April 2010, UKIE had it confirmed that our concerns about WTO trade classifications could be addressed without affecting the introduction of tax breaks."

"UKIE had a meeting with TIGA on 13 September where we shared with them every piece of correspondence that we had on the issue of tax breaks including the document that refers to the WTO question."

"We have continued to support tax breaks at every given opportunity and at no point has it ever been indicated that our resolved enquiry about WTO trade classification had any effect on the government's decision to not introduce them."

"Following the decision not to introduce tax breaks, UKIE wrote to the Treasury to ask for a full explanation of the reasons behind their decision. We were told that the government believes that a simpler tax system with lower rates for all is the most effective way to support economic growth. They have also said that the proposal was poorly targeted and needed to be more culturally focussed."

"The Treasury has recently further clarified the government's decision in a parliamentary debate reported by GamesIndustry.biz. The main reason given for not adopting tax breaks was that government did not accept the validity of TIGA's analysis."

"UKIE continues to work closely with TIGA to develop and support the call for tax breaks for the UK's video games industry and has recently given joint evidence on the issue, with TIGA, to the Scottish Affairs Select Committee."