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Canadian Report Calls For Tax Credit Reform

Developers in the Canadian province of Ontario should receive an increase in tax credits, according to the findings of a new report, which suggests that the current system needs an overhaul to remain competitive both nationally and internationally.
Developers in the Canadian province of Ontario should receive an increase in tax credits, according to the findings of a new report. Although Canada in general has some of the most generous tax credit arrangements in the world, the government-funded report says studios in Ontario need a better system that provides more reliable funding. The current tax credit system offers up to 30 percent for developers who own their intellectual property rights (25 percent for those that do not), which compares to 35 percent in Nova Scotia and 45 percent in Manitoba. Titled "Ontario 2012: Stimulating Growth in Ontario's Digital Game Industry", the report indicates that the province generated only $70 million in video game-related revenues in 2006, with 850 developers employed at a range of mid-sized console developers and small PC studios. These include Unreal Tournament developer Digital Extremes and Dragon’s Lair 3D developer Digital Leisure. Speaking to website IT Business, Digital Extremes president Mike Schmalz suggests that an increase in tax credit is not as important as lessening the importance placed on intellectual property rights, and the three-year production limit currently imposed. The report also suggests that developers should be able to claim credit for every fiscal year, instead of waiting till the end of a project.

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