Video Games Tax Relief programme under fire for benefiting foreign giants

October 4, 2019 | 12:11

Tags: #game-developer #tax-relief #vgtr #video-games-tax-relief #video-gaming

Companies: #sega #sony #triangular-pixel #uk-government #warnermedia

A media investigation into the UK's Video Games Tax Relief (VGTR) programme, designed to offer financial relief for smaller UK companies making games with British cultural value, has revealed that around half the tax breaks have gone to multi-billion-dollar international corporations including WarnerMedia, Sega, and Sony.

The Video Games Tax Relief (VGTR) programme was introduced by then-Chancellor Alistair Darling back in 2010 as a five-year project to offer UK gaming companies tax rebates as a means to encourage the growth of the domestic industry. The programme was killed off mere months after its introduction by successor George Osbourne, then reinstated following industry outcry. Originally scheduled to expire in 2018, the programme was extended through to 2023 in November 2017 - but it appears that much of the money invested in the programme has been quietly leaving the country in the pocket of US multinationals.

An investigation carried out by The Guardian has found that nearly half of the tax rebates handed out under the programme have gone to just four foreign-based multinational companies making games with no recognisable British influence whatsoever. Of these, WarnerMedia claimed around £60 million in tax rebates under the programme, Sony claimed nearly £30 million, and Sega around £20 million.

Some of the blame, the report claims, can be laid at the door of the British Film Institute which is responsible for judging whether a game adheres the the programme's requirements to offer cultural value in the UK: The paper claims simply having staff or offices in the UK or European Economic Area, even if the majority of the company is headquartered elsewhere, is enough to earn points for approval, as is having the game use the English language - even American English.

Around 80 percent of the tax relief handed out by the programme thus far have gone to those requesting £500,000 or more for large projects, the Guardian's figures show; by contrast, only three percent of the funds handed out went to smaller companies asking for less than £50,000 each - despite accounting for more than half of successful claims under the programme.

Games industry group Ukie has defended the programme, as has small four-person Cornish developer Triangular Pixel which is one of the UK companies to have benefited from the tax relief on offer. WarnerMedia, which received tax relief for the Batman: Arkham series of games under the initiative despite the games using a US IP and being set in a fictional US city, Sony, and Sega have not commented on the report and its claims that they have unjustly benefited from the programme.

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