Nordicity, a consulting firm with extensive knowledge of tax credits in the gaming industry, has played a crucial role in assisting trade groups globally.
The firm has been instrumental in elucidating to legislators the benefits of tax breaks, enhancing the competitiveness of regions. Moreover, Nordicity has aided governments, whether in the exploration phase or implementation logistics, showcasing its versatility.
In a recent interview with GamesIndustry.biz, Nordicity’s Co-CEO and Managing Partner, Kristian Roberts, discussed the prevailing landscape of gaming tax breaks worldwide.
Roberts highlighted the emergence of regional competitions, often described as “arms races,” with a particular focus on Continental Europe and Australia-New Zealand.
Referring to New Zealand’s 20% tax break program, Roberts emphasized its implementation as a response to Australia’s initiative, creating a domino effect compelling neighboring countries to adopt similar measures.
This trend aligns with the competitive dynamics outlined by Roberts, where jurisdictions race to secure the gaming industry by crafting their own tax credits.
Roberts underscored the increasing pressure on countries in Europe, citing Italy and Ireland’s recent adoption of tax credits. Even traditionally hesitant nations like Germany are considering the idea due to concerns about labor costs compared to neighboring countries.
Looking ahead, Roberts anticipates future “arms races” in South America and Southeast Asia as mid-tier jurisdictions seek to transition from service-based work to developing their intellectual property. These regions view tax breaks as pivotal in fostering their own gaming ecosystems.
Addressing the longevity of tax breaks, Roberts noted that governments typically don’t contemplate their permanence. The primary focus is on immediate competitiveness, leaving future administrations to grapple with the question of continuity.
Roberts acknowledged the risk of political shifts affecting tax break policies, citing instances in Canada and the UK where changes in government led to the cancellation or reconsideration of incentives.
However, he praised industry trade groups for effectively mitigating such risks by engaging with opposition parties before elections.
Regarding the efficacy of tax breaks, Roberts clarified that they primarily create jobs rather than wealth. While they successfully boost employment in the gaming industry, their impact on original intellectual property creation is limited.
Roberts highlighted Canada’s experience, where tax breaks contributed to industry growth but didn’t necessarily translate into wealth generation or ownership of created intellectual property.
In conclusion, Roberts suggested viewing tax breaks as a means to enhance labor competitiveness and reduce production costs. To foster new intellectual property and wealth creation, he recommended complementary measures like funding support, emphasizing that tax breaks play a more incidental role in this aspect.