Government suggests possible tax breaks for computer game developers

The government has indicated that it is considering taxation breaks for video game developers to help them compete with rivals in countries such as France and Canada.

According to the Financial Times, creative industries minister Margaret Hodge explained to a games industry seminar in Westminster that the government was prepared to look at tax breaks to make the sector more competitive.

"We have now succeeded in persuading colleagues across government that we should look again at this issue, particularly in light of the French situation," she is reported to have said.

Ms Hodge was referring to a decision made last December by the European commission that allowed the French government to introduce 20 per cent tax relief for computer games makers who met certain criteria.

However, the FT added that Ms Hodge remained cagey about the extent of the possible relief, explaining that the industry would have to "demonstrate a genuine market failure" before the government press ahead with any tax reform.

She explained: "We are nervous about these forms of tax relief. Because there is a fiscal squeeze, we don't want to get into an international Dutch auction where we vie to outbid each other on tax relief."

Recently, a survey by the British Chamber of Commerce warned that companies in the UK were concerned that business tax rates would be increased in the coming months to try to support the government during the economic slowdown.