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The government has begun consultations over its plans to introduce corporation tax breaks for the animation and video games industries in 2013.  The government department responsible for applying this relief has confirmed it will propose a test to identify ‘culturally British’ games, in order for companies to receive support.

Producers of ‘high-end television’ are also to be included in the new scheme. The Department for Culture, Media and Sport (DCMS) definition of high end television is still being finalised however, it is likely to include productions which cost upwards of £1m per hour to make. The DCMS has also confirmed that all companies would be subject to State Aid approval from the European Commission.

Currently, in Europe, state aid rules that with video games’ tax relief, there must be a “cultural test”.  “We are now seeking views on a proposed cultural test that will identify culturally British video games, animation and high end television that might be considered eligible for the new tax relief,” said the DCMS. Games and productions would be given a ‘cultural value’ score based on the points received from the testing. For example Activision’s Call of Duty games, which are based on shooting people in WWII counts as ‘British Cultural content,’ as well as Harry Potter console games as they are based on a book written by a British author. Some games like Grand Theft Auto would find it hard to qualify for the tax relief because the setting, music, and synopsis is set in the US. Earlier this year Richard Wilson, CEO of UK games developers industry association Tiga, said many companies seeking the relief may run into a number of hurdles when it comes to a “science fiction game or an arcade or puzzle game with little narrative.

“The Government is committed to supporting these creative and dynamic sectors by introducing tax reliefs for these industries,” said creative industries minister Ed Vaizey. “The film tax relief has been a huge success and I encourage all those with a vested interest in the animation, high-end television and video games industries to take part in this exercise, and make sure your views are known.”

At present, film producers that qualify for tax relief, with a budget of £20m or less, can apply for a 25% rebate on certain expenditures, eligible films must be released in the UK, with 25% of their production costs spent in the country.

Britain was the third largest games maker only six years ago but is currently the sixth-largest.  A study from Tia suggests that Games Tax Relief would generate and safeguard 4,661 direct and indirect jobs and £188m in investment expenditure by studios.  Research also estimates that it will increase the games development sector’s contribution to the UK GDP by £283m and generate £172m in new and protected tax receipts for HM Treasury.

The deadline for responses is 29 October.

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