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UK games tax breaks: Prime minister 'hopeful of good news soon'

David Cameron calls games a "vital industry that is so important for the future of our country"

UK prime minister David Cameron has provided an update on the status of proposed games tax breaks for British studios, stating in the House of Commons on Wednesday that he was "hopeful of good news to come."

The British government announced a games relief proposal in March 2012, which it said was "subject to State aid approval and following consultation".

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One London-based games lawyer said he believed it would take "at least a year" to get the tax breaks off the ground "from an EU and practical perspective".

However, domestic tax relief plans were delayed in March, meaning almost two years have now passed since the government proposal.

Pressed for an update on Wednesday by Dundee West MP Jim McGovern, the prime minister assured the government was still locked in conversations with the EU Commission.

"I absolutely share the honourable gentleman's frustration," he said. "I think it's perfectly within a government's rights to set out a way of helping and supporting vital industries like this, that are so important for the future of our country.

"We're discussing it with the European Commission and are hopeful of good news to come shortly."

Under EU law, member states cannot take action to favour their own domestic industries over those of other members, unless given EU clearance to do so.

The prime minister's latest comments will inspire optimism that the pathway to game tax breaks in the UK has been paved.

Chancellor George Osborne previously committed to introducing a tax break of 25 per cent in December 2012, described at the time as "among the most generous in the world".

Games studios in France have for several years been able to take advantage on state aid providing their projects meet certain cultural requirements (CVG's analysis here)

The tax relief would be received with great jubilation by many, but not all, across the UK games industry, which in recent years has transformed from a nation of triple-A studios to one of smaller micro-studios. Many British games professionals, particularly those with skills in triple-A development, have relocated to countries such as Canada, which employs a world-leading tax break scheme.

In June 2010, it was reported that the UK's games development workforce had fallen by 44 studios - six percent - since 2008.

Chancellor Osborne originally scrapped plans to implement UK tax breaks for games when the Coalition Government came into power in 2010.

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