This issue has come back into focus again as the UK government is now granting tax breaks to computer game development companies. Qualifying companies can get up to 25% relief on their development costs. Others countries such as France and Canada has also successfully introduced tax incentives for video game development companies.
Why are they doing this and what is the implications for the Irish games industry?
Currently the global games industry is worth over $80 billion. It is now the largest entertainment industry sector. As computer games are essentially software products, they can be developed in any country in the world. Forward looking governments realise the significance of this industry and are doing everything they can to attract game development talent and investment.
Ireland should be doing the same. We have a small (but growing) number of indigenous game start-ups and some high profile multinational game support companies. The IDA has done well to attract these multinationals to locate in Ireland but in general, they are here for the same reasons as most other multinationals. They are not here for game development talent – most don’t do game development in Ireland.
Typically countries offer a 25 to 40% tax incentive to game developers. To compete, Ireland should offer a flat 50% tax relief rate against qualifying development costs and only for the creation of original IP (intellectual property). With these stipulations, this tax break would ensure that only high value jobs are created. Within a very short period, we will get international game development companies locating their R&D teams here. Like the music business, the games industry is a hits driven industry. 1 in 5 games breaks even, 1 in 10 makes a profit. The top 10% makes the majority of the significant profits. So for a country to have a successful games development industry, you need a critical mass of developers. We don’t have the numbers yet in Ireland.
An attractive focused tax incentive would be a good start. As the UK has recently introduced their games tax incentive, Ireland should introduce one in the next budget. It is a competitive global marketplace for games development talent, we need to act quickly.