Global Competition for Game Industry Tax Incentives Heats Up

Nordicity, a consulting firm, has extensive experience with tax credits for the game industry, having collaborated with trade groups and governments worldwide to implement competitive tax breaks. Recently, Nordicity's co-CEO Kristian Roberts shared insights on the global landscape of gaming tax incentives. 'It's a regional arms race,' Roberts explains, with Continental Europe and Australia-New Zealand being the primary battlegrounds. New Zealand's recent adoption of a 20% tax break program, for instance, was largely driven by Australia's existing incentives, which put pressure on neighboring countries to remain competitive. This phenomenon is not unique to these regions, as Roberts notes that Italy and Ireland's recent tax credit implementations are pushing other European countries to follow suit. Even Germany, which has traditionally been averse to tax breaks, is now considering them to stay competitive. Looking ahead, Roberts anticipates increased activity in South America and Southeast Asia, where 'mid-tier' jurisdictions are transitioning from service-based work to developing their own intellectual property. However, he cautions that tax breaks are not a permanent solution and may be subject to changes in government. While tax breaks can help employ people in the game industry, they may not necessarily create new intellectual property or generate wealth. Instead, they can be seen as a job-generating mechanism, with funding support for new IP being a complementary aspect of the equation. Ultimately, tax breaks are most effective when used to make labor more competitive, reducing production costs and allowing companies to scale up and take advantage of new opportunities.