B.C. Creates New Video Game Developer Tax Credit

By February 4, 2010News

Courtesy of Flickr’s vistavision

Could this be the support that local video-game developers were looking for?
The B.C. government just announced the video-gaming industry’s first major tax credit and also showed some love to B.C.’s film and television industry. Thanks to MCD for the heads up!
What’s in the deal?
There will be an increase in the B.C. interactive digital media tax credit–17.5 per cent– of qualifying labour costs in video game development. The digital animation and visual effects tax credit also gets an increase to 17.5 per cent. Foreign producers also get an increase in the labour tax credit to 33 per cent and the qualified labour expenditure cap rises to 60 per cent.
What does this mean for Facebook and iPhone game developers, like us?
First, any incentive that helps small start-ups grow is welcome. (Although it’s still hard to say how this tax credit will play out for startups in particular.) B.C. game developers will still have to choose between the new tax credit and the existing Scientific Research & Experimental Development (SR&ED) incentive program, as this tax-credit doesn’t replace it.
Second, incentives that encourage film and television production to take place in B.C. also indirectly benefit game developers like Ayogo by facilitating the natural partnership between our industries. Film production companies create the type of high quality original intellectual property that helps our social games stand out from the crowd, and our games, in turn, help extend the reach of the film, along with providing an ancillary revenue stream.
If approved by legislature, the interactive media tax credit applies to video game development projects that begin after Aug. 31, 2010. So, what do you think? Will this new incentive be a good thing for start-ups?