The video game industry has welcomed the federal government’s digital games tax offset of 30%, after an eight-year effort lobbying the government for such a change.
The federal government announced the 30% tax offset for the video game industry as part of a $1.2 billion boost to the government’s digital economy strategy that will be included in the May 11 budget.
Ron Curry, chief executive of the Interactive Games and Entertainment Association (IGEA), says the tax offset will encourage international investment in local mid-tier and smaller businesses by showing that Australia “is open for business”.
“This just signals to the world that Australia is now open for business, and that we’re happy to compete on a global basis,” he says.
Curry says Australia already has a rich and exciting independent game development sector, with games like Moving Out and Untitled Goose Game testimony to the sector’s quality.
“It’s already there, what they need is that next lever to move from a mid-sized company to a much larger company,” he says.
IGEA has been lobbying the government for a tax offset to help make it competitive on the global stage since the Coalition was elected in 2013.
It’s a change that numerous organisations over the years have called for, including Austrade, whose 2020 report found that potential investors were choosing not to do business in Australia because the lack of tax offsets meant it was cheaper to go elsewhere.
“We’ve been lobbying for some change since the current government came into power. So, it’s been a long-term effort for us,” Curry says.
The global game development market is valued at $250 billion, and currently 90% of the revenue generated by Australian game developers comes from export revenue.
The creation of a 30% tax offset will allow Australian developers to produce more games for overseas export and increase international investment in the local gaming industry.
“The games that they develop aren’t just about selling in Australia, that’s only small part of the market,” Curry says.
Curry says the tax offset will also “boost confidence” to invest in Australia and will attract a number of AAA publishers who have looked to Australia to set up studios.
“We certainly know that we will see large AAA studios moving to Australia,” Curry says.
The tax offset was announced as part of the government’s digital economy strategy that will boost investment in infrastructure, skills, cyber security, regulations and digital trade by $2 billion over the 2020-21 and 2021-22 budgets.