UK tax payers to cover 25% tax break
following up on my tax credit / kickback in vfx thread i came across this gem.
http://www.bbc.co.uk/news/technology-22185476
the sad thing here is that the artists lost there jobs in the UK and the jobs were shifted to canada and elsewhere to chase the tax breaks. now the UK government is showing a little tax break T&A to get the studios attention. all of this comes straight out of the tax payers wallet. so the artists are essentially paying multi billion dollar corporations out of there own pockets for the privilege of getting the same jobs that they had before they were shifted over seas in the first place.
its just to sad what is going on. total clustrfuck for artists world wide.
http://www.bbc.co.uk/news/technology-22185476
the sad thing here is that the artists lost there jobs in the UK and the jobs were shifted to canada and elsewhere to chase the tax breaks. now the UK government is showing a little tax break T&A to get the studios attention. all of this comes straight out of the tax payers wallet. so the artists are essentially paying multi billion dollar corporations out of there own pockets for the privilege of getting the same jobs that they had before they were shifted over seas in the first place.
its just to sad what is going on. total clustrfuck for artists world wide.
Replies
But that article doesn't seem to reflect your thread title...
they were planning to implement the subsidy but now there under investigation. so its not happening 'yet'. is that what you mean? i think the rest of the EU is wiseing up to what is going on just like the US states are. there all getting played by the media cartels and its a dash for more cash and the jobs go away as soon as they find a bigger sucker.
What happens when tax breaks are taken away? Well that is worrying but not as worrying as the current decline in the UK dev scene.
I will be very disapointed if these tax breaks don't make it. The focus on small studios and mobile devs is key. The UK became a leading country in game dev suring the BBC / Commodore years because of exactly the same type of small startup studios, and we've seen alot of veteran studio heads starting up mobile dev outfits recently. Mobile dev is likely going to become the lifeblood of the UK games industry and if this tax break could make us a world leader for mobile studios we could see more developers staying.
your correct i noticed that the title did not mention 'tax' so i changed it. had a bit to much coffee when i posted that one.
@fearian
problem is most of those tax breaks will go to a few large multinational corporations mostly american. they will kill off all the local small developers or drive them out of business or buy them because they can not compete. then when they finally get a few shops set up in india and china and singapore in the next few years they will ship all those jobs out of the uk and you will be in the bread lines just like the artists in california are now. its not going to happen mate. its a scam. they always have a rosy story to tell you. once the get the money and find a better deal is so long sucker. and everybody gets the hatchet.
Finally I want to reiterate what someone said in the other thread - games studios do not follow the same 'bidding war' system that vfx studios do. VFX studios fight over a limited number of films and work on very quick turnovers - down to a couple of months for a project. And then they suddenly need to find another project! Games studios (ideally) create projects. That's not to say there isn't a problem, but it's not as rapid or disastirous as in VFX. Another difference is the increase in smaller indie and mobile studios. The typically arise locally and are not intersted in jumping continents to set up shop.
its clear as a bell. the bbc would not have a story about tax breaks if there was no tax breaks. the story is the tax breaks. the cat is out of the bag. no one can hide whats going on. and no one on this board is going to benefit from them. hear today gone tomarrow. its not worth defending. unless your a sucker.
tell ya what mate. the birthplace of vfx, the industry that california built with our bare hands over the last 100 years with no ones help has be destroyed. not job losses... destroyed. as in good buy no more ilm, no more vfx. by who? a few multinational corporations that have shifted 'not created', shifted the jobs to countries that give them tax breaks to artificially build bubble industries. i have a lot of sympathy for the uk artists and the shit that is going down there because its the same thing that has gone down here. guess what its not going to get better. you are a temporary stop for these multinationals. cheaper then the us because of artificial subsidies payed out of your pocket. they are already getting ready to move most / all of the work to china india and singapore. i dont care what they tell you its a lie. thats the con mate. its time for everyone in the us, uk, canada, aus and everywhere else to come to grips whit the facts. they are playing everyone against each other and we are all going to lose.
whats the matter? feel a bit uneasy when the truth comes out? liked it better before when you could snicker at all the people across the pond going bankrupt, having there careers destroyed so you could buy your way into some fake prosperity.
How is it coming out of my pocket??? You aren't making sense.
who is paying the tax to cover the subsidies? you are. its extremely simple actually. you pay for it just like the nhs and everything else.
edit:
i can't edit the damn tital for some reason there should be tax in the tital not overall cost sorry about that.
The UK public doesn't pay for 25% of the dev costs through tax.
The UK govt doesn't get 25% of the tax costs resulting from development.
i.e. Developers don't get given the money, they just don't have to pay it.
There is a difference.
The UK game dev tax breaks have been announced, canned, revived and now delayed (the delayed bit is what the article is about). This isn't new.
Any developer that meets the criteria is eligible for the tax breaks, no matter the size. The criteria are easy to achieve and are available on-line already.
http://www.develop-online.net/news/42752/Revealed-The-video-games-cultural-test
We have already lost a lot of work overseas, I have had a few jobs managing outsourced work. The majority of larger UK studios seem to outsource in some way. How much experience do you have in development as you are sounding quite naive when it comes to the state of the industry? Tax breaks might make the UK more attractive to set up shop in and they will definitely help us already here.
I'm sorry you seem to have had bad experiences in VFX but games are not VFX!
Exactly! Its not complicated!
that is not true any more. these guarantees have become 'transferable' which means they can use them as collateral against loans etc. just like any other asset they have. there effectively cash at this point. you thought they would not figure out a way to turn this into real money?:)
granted i am not an expert on uk studio financing. but the point is that its a slow bleeding that is going to get worse. once the uk get another level of tax breaks more jobs will be shifted, not created shifted out of other jurisdictions. and as you noted the uk is feeling some pain but it seems manageable. hey we thought the same way. guess what the end of the line stops in india. i do know a lot about film financing and i can tell you that the large publishers and conglomerates are all converging on a 'new' business model. that includes games, film, etc. unfortunately it does not include very expensive lilly white europeans or whiney americans
yes i noted on my first post that the tital is wrong. it should say 25% of 'tax cost' not just cost. sorry about that. i can't change it now, i tried. but article and the point about tax subsidies still stands.
Please tell me you're not serious.
FFS. It's not a subsidy. It's not a subsidy. It's not a subsidy.
No tax is being subsidized. A subsidy is where you are given money. The train system in the UK is subsidized as fares do not cover running costs. The NHS is not subsidized, it's funded by the government. The UK government is not giving any one in games any money...
Which means it's not a subsidy. They are paying less tax.
If you can't get the basics right how can I argue with you! ;-)
I welcome anything that stops the UK game Industry shrinking any further.
I have a better idea. Let's discuss what the article is actually about; this investigation, and why it's happening.
you think this is a joke? you think i'm kidding? over reacting? you think i read this kind of stuff for fun?. its OVER. LA is gone. sorry if you wanted to visit. you will have to go to london then bangalore, singapore and china in the next few years. you can still come and take your picture at hollywood and vine but the movie thing is done.
ilm decapitated, rhythm and hues bankrupt, digital domain bankrupt, spi decapitated, etc etc. the last pieces of these companies are being packaged up and shipped to the lowers tax jurisdiction. r&h (life of pi) was acquired by prana studios of india. they will ship 80% 90% of all production to india. disney is in the process of chopping ilm into lots of little pieces and shipping it to all the lowest tax jurisdictions. it looks very likely that the next starwars films will NOT be produced in california.
its over, sorry to tell you this is just the first step but its going keep going untill its all in china just like you computers and everythig else you buy. you will still get to watch starwars but it will be 'made in china' just like everything else.
so the EU is investigating this scheme because its some silly harmless diddle?
nice try but still rather weak diversion. it is a subsidy, a payoff cash under the table etc. if i tell you that for every 100 dollars you spend i'm going to give you 25 back, yes it is a subsidy and a pay out form the public coffers. i know why you have no problem with that because it artificially lowers the cost of production and under cuts all the other competition in the marketplace. its done wonders for soho:). which is estimated to be arout 50% to 75% subsidies in one form or another.
but the reason why the UK is under investigation is that it more then likely violates free trade and competition laws and while the us media conglomerates are making a profit at your expense and quite happy with you giving them your salary money. unfortunately the slow bleeding is in the rest of europe gets people in the mood to find out why all the jobs are being shifted around? they can't play the same game the us corporations can play. once the cards are on the table the uncompetitive subsidies and protectionism will be shown for what it really is.
a job killer for every country but the one who can drop the costs the lowest for these corporations with tax payer funds. its a race to the bottom and its not going to benefit anyone in the west in a few years. you will be getting the email to move to china or be let go. i think the subsidies will be challenged long before that because they are to destructive.
No, no and yes.
Most of the companies now are owned by either the chinese or indians. They dont talk about it much, but few are actually american companies anymore.
No one goes to hollywood and vine to take pictures, unless they want to snap shots at a wallgreens (department store), a chase bank or some burger joint. The only thing to see on hollywood and vine are the crazy homeless people that sit around talking to the voices in their heads. Its already looking like little mexico given the population numbers and quality of infrastructure around there.
Thats really the crux of the issue, not who has tax breaks. Why do you think these companies are going bankrupt? Who is to blame? I can tell you it has to do with a mixture of bad management, economy + cost of living, and lack of national competition and politics. The film industry would also pay those producers, SAG members and the director far more than any vfx jocky.
None of this can be blamed on the chinese, the indians or even the UK for giving tax breaks or looking into tax breaks.
The only ones to blame is the industry itself, the country (US) and its non competition politics. It would rather recklessly tax more, penalize more, and charge more, than stay competitive and fill the needs of its people. The US doesnt import talent like it used to, it exports talent (what little is left). We can only blame ourselves and the progressive and neocon mindsets that have take control of those in power. Their priority is increasing the spending levels, no less no more. Over 65% of all federal spending here is for entitlements, and they want more. We are cannibalizing ourselves.
Its not all over, whatever IT is. Films will still be made, tech will still be made, but there is a shift taking place. You can make the argument it is not a good shift, but its a shift none the less. Put the blame where its due... and in this case, you cant attack the UK for looking into smart incentives to help boost their own economy.
You also seem to take a lot of people's posts personally. IF they prove you wrong on your assessment, then just admit it. There is nothing wrong about being wrong, but there is a lot wrong about being wrong and being too stubborn to admit it. Thats a lot of whats causing the industry to shift away from the US to begin with.
dont worry you will be in the bread line soon enough if these people are let free to do what they are planning to do. and don't think your home grown ceo's have any more respect for you then ours do for us. in fact there desperate to catch up with our bastards. your just the first batch of wood to go into the fire.
I think you underestimate the difficulties. Making games is more than making art. Art and to a degree programming can be outsourced and in-sourced, but even that isn't easy. Finding senior people can still be a challenge in China (let alone India). You have rising costs as well in the coastal cities. And there's some technical positions which are very hard to fill. Positions that require cultural knowledge and language skills are even more difficult to fill.
If it were that easy, then we would have at least by now some international renowned games made in China (or India) but the closest one I can come up with is made in Korea/Japan, and those aren't cheap places either. Now there's some Chinese games for the domestic market which are hugely popular but they're not really for western audiences.
And even here in China you won't find games people working for 2 bucks a day, except the ones who farm gold (although I wager even they earn more). Kickass Chinese talent can get wages here close to western counterparts. The working for peanuts days are coming to an end. Some people I know even joke that we'll soon outsource to the US with the rising RMB
Personally I think tax breaks are the wrong way. The money saved just wanders into the wrong pockets, and once the breaks are gone the shops pack up and leave. Better provide awesome infrastructure, tax breaks to the employees and not the corporations (e.g. they had breaks for foreigners in Norway to attract foreign workers) and provide kickass education for talented workers who's awesomeness you can't easily match overseas.
Yes but that's not how this is going to work. There are no subsidies on offer. Do some research into what the UK government is offering and don't base it all on the shady deals done in the US.
i have no illusions this is initiated by a few americans ceo's and share holders who simply do not want to pay for it anymore. i also don't blame the UK politicians or the public for acting in there own best interest.
but don't be a sap and think that californaia or anyone else is going to take it on the chin as the jobs are shifted to lowere and lower wage countries. thats not how this is going to play out i can assure you. trade warfare and escalation is going to happen just like it is happening in every other sector. because its not just the us that is getting the shit stick its everyone. the only one who is winning is the corporations. once the nitwits in sacramento figure out that a huge chunk of there six figure salaries from la county to sonoma have gone poof, the very jobs they thought were going to pay for there shiney new pensions they are going to do what they always do throw money at it.:) the people who have the most to gain for a billion dollar tax credit fund to make disney and the rest of the schmucks hard for california again is already in the works.
its not about competition or who has the best artists its about cash payouts funded by the tax payer in exchange for jobs.
the reason why there is no 25% tax credit atm is because the uk is not a sovereign nation anymore there just some little island in the united states of europe. they have no leverage now to stop the eu and the troika from dictateing there domestic policy. the rest of europe would like some of that pie also thank you very much. and if there is one thing that the nauseating halfwits in brussels like to do is bend the uk over and give her a good shafting. i dought if they want all there darling children who have worthless game degrees to end up living at mum and dads the rest of there life. while the uk lives in the plush digital media greenery.
as i said this is a race to the bottom and in the end the only ones who are going to win are the indians the chinese and the corporations. the corporations are playing everyone against everyone and there is going to be a lot of money wasted and divisiveness for something that could be avoided.
I reckon your stay here will be very amusing gray!
if there was even half the shady deals done in the us as there is in the uk concerning subsidies then we you not be in this mess
we set the mold for globe hopping this is just the next step where the plan goes down while your half way over the pacific. no one is looking for sympathy. its more like we are throwing up flares trying to warn everyone that there is an iceberg ahead and its going to sink your ship. not just give you another bump on the bow.
"Perhaps it's time to leave the VFX industry?"
the reason i post here is to do just that at some point. it scares the shit out of me that the same thing that destroyed vfx is creeping all over games like a cancer now. its like deja vu.
im going to ignore your last comment because you know that is below the belt and un called for.
@Kwramm
we have huge r&d departments that have a direct pipeline into the universities to pull out phd's to write new renderers muscle systems physic etc, etc. trust me we have all that to. most of our tech is kicked down to games as far as the graphics code goes. what % of any major studio does that core research maybe 10% tops. then there is a big bulk of coders and then a huge herd of artists.
they are not going to ship 100% to india and china. ther goin to ship 90% all the artists and most of the coders. then there will be a small research group that develops all this stuff that stays in the uk the us aus etc. so in essence my point is that all of the artists are toast. and most of the programmers.
i don't have a phd and i don't write physics simulations. i don't think anyone here does that sort of thing. we are the ones going down the toilet. not the studios or the researchers.
Plus thinking of artists the way you do doesn't really reflect the truth. Outsourcing an entire level building pipeline for an AAA title is easier said than done. Currently it's made in China, assembly in EU/US with important parts done in EU/US. Anything that needs tight integration can still be a challenge for many outsourcers due to logistics and sometimes infrastructure too (yes, I hate you crappy Chinese internet!)
Except it's not a subsidy...
It's not 'cash under the table', it's a reduction in tax. It doesn't come out of public spending. Less money changes hands. Your argument only holds true if more money is being taken in tax elsewhere to compensate.
Which it isn't.
i hope your right. i really do. but we had 'stable' out sourcing for the good part of 10 years and after the momentum keeps building and the pieces get put in place boom it all gets nasty very quickly. these ceo's go to the same dinner parties. there all on the same team and they all want the same thing.
we have argued this into a circle and clearly we disagree. i posted this because the EU seems to be undecided at this point also. so the jury has yet to decide if this is good for the rest of europe. don't be surprised when the germans and the french decide that shipping all there hi tech media careers to london is a bad idea
Imho the biggest danger to many studios are their own managers rather than outsourcing. Questionable funding, dodgy business plans, too fast growth, having no long term plan, spending on the wrong things are all more dangerous. There's even been studios expanding to China just to learn the hard lesson that it's more difficult to set up shop here than they thought.
Most people just see cheap wages here. They forget about all the bureaucratic hassle, the problem of finding quality staff, the cultural issues, different QA standards, corruption, loose IP and (c) laws, industrial espionage, etc. You have to be pretty damn tough to run a business here.
Also, who is going to London? I remember in 2000 there were many big game studios there, but then it all moved away to the periphery and even further. There must be less than a handful of big studios left in London proper. Last time I checked there was SCEE and some other studio. London is expensive
This kind of mentality of "chasing" tax breaks and other financial incentives is bad for the stability of the industry. A successfully run business should never have to rely on such advantages to get by. And if they do, they will move elsewhere as soon as the tax breaks are cut short.
This is one more example of the industry being led purely by short-sighted business men instead of experienced developers. We need more people calling the shots who have served their time in the trenches, and actually understand how games are made.
if you think that they think that way with 10% to 25% youth unemployment stretching from france to greece and a huge crop of game school chancres to deal with your missing it. there in crisis mode. not the soft fat and happy dopes they were a few years ago. its a fundamentally different climate. there probably even more worked up then i am at this point.:) and don't think Cameron is doing you any favours here we all know what team hes on and its not the home team.
about vfx, dont forget vfx and animation are part of the same industry. all the animation studios do full service and original productions. they are the one who are responsable for all this not the small boutique studios. ilm, its part of disney now. its disney that is shuttering production in california not ilm. its the large studios and media conglomerates that are causing the collapse. there the ones that open a shop in every tax subsidy area and shift all there jobs to the best deal.
you made a lot of other good points and those are the reasons why there is some stability to the situation. but time marches on. and asia wants a piece of the pie. and every film studio, game studio and large media conglomerate wants a piece of the chinese market.
i think the deal with the devil that will take everyone out not just california is this.
the corporations want a piece of the chinese consumer market. the chines say ok we will give that to you but in return you have to move the jobs here.
that is the fundamental issue. what are these corporatios going to do? turn that down to protect the artsts? it even better then they could hope for because they can just turn around and use those same chineses studios to make there western product. they nake a fortune in both directions. for them it a total win. the could not ask for anything better. if i was a ceo at one of these corporations thats what i woud do to get that 50 million dollar bonus.
china, singapore and india at this very moment are opening full survice studios. its happening now. so maybe 2016 you will start to see them take over the serious productions.
i just see so many of the same things happening in games and we had the same attitude. we can deal with it, etc etc. most of the vfx world is still in shock. i dont want to see the same shit go down in games. the small studios will probably survive but these huge publishers that suck up all the small studios are no different the disney or dreamwors.
exactly this. the notion that anybody is paying for these breaks is just ignorant of the facts at best, and plain stupid at worst.
here's how the uk taxation system works:
company x makes £2,000,000 in revenue.
company x has £300,000 in expenses (employee wages, building leases etc.)
company x therefor has £1,700,000 in taxable revenue
company x has to pay 23% of £1,700,000 in tax, which is £391,000
company x has hit the criteria needed for a 25% reduction in tax, so they now only have to pay £293250.
simples.
edit: FYI, that means they could potentially use the money to employ an extra person, doubtful that they will, they'd probably rather have extra profit to show. but it's possible.
now take something like Brink, made by Splash Damage, which i think estimated something like 2.5m in sales at between £77m and £90m revenue, you can see why that 25% tax reduction might now be a more attractive opportunity.
Edit: Let me put it this way:
You break something in the office and your boss demands you pay for it
Scenario A: You give them $500 after your next payday
Scenario B: They dock your pay $500 from your next paycheck
Are you still paying for it in scenario B? Of course you are. You've paid for it in the form of lost income. In both cases the net result is exactly the same, you're $500 poorer.
The government pays for a tax relief subsidy in the form of lost income as well. And the government is "you", not you specifically, but you as the collective taxpayers who now have less money to spend on other things "you" might think are important to society such as teachers/bridges/roads/fireman/social safety nets/or simply paying down debt. So yes, you are paying even when no money changes hands.