With billions of dollars at stake in the entertainment world's fastest-growing business, the British government is launching a trade battle with Canada over tax credits being used to expand this country's video game industry.

For months, British companies have been decrying the exodus of European game developers to Ontario, Quebec and B.C., where tax incentives are attracting multimillion-dollar investments and thousands of highly skilled foreign workers, whose talents are fuelling the Canadian industry's exponential growth.

"The Canadians have driven a tank over the French Citroen and have now parked on our lawn," Paul Jackson, head of the industry organization representing British games studios, complained to the Financial Times earlier this week. "It is becoming very challenging to keep core development studios here."

Now, the U.K. Ministry of Culture, Media and Sport has formally initiated an investigation of Canada's trade practices through the European Commission, a British government spokesperson told Canwest News Service on Thursday.

"The U.K. government is concerned that state aid offered to computer games companies by a number of federal institutions in Canada may not be compatible with World Trade Organization principles," the ministry said.

In Canada, Manitoba has the most generous tax system, allowing companies to write off as much as 45 per cent of labour costs. Quebec offers a 37.5 per cent labour tax credit. Ontario offers a 30 per cent labour tax credit for small companies, and 20 per cent for companies whose annual revenues are above $20 million. Nova Scotia and Prince Edward Island also have labour tax credits.

In B.C., there is no labour tax credit, but private investors receive a 30 per cent refundable tax credit, to an annual maximum of $60,000, when they invest in new media ventures. Corporations receive the same amount in a non-refundable credit.

If this is indeed an exodus from Europe, it is likely most developers would go to Quebec, where Ubisoft has its largest studio in Montreal.

the UK Ministry of Canadian Ministry of Culture, Media and Sport (wow is that ever a mouthful)

Blame Canada!

Nvm

I am terribly confused isn't Canada doing what a competent government is supposed to do. Encourage foreign investment in their economy, and strengthen their local economy with good paying jobs. What a novel concept sounds like something Britain should consider. I am not even seeing unfair competition here its not like the economies in question are disproportionate to one another.

I might see the point if there were game development sweat shops with poorly paid Canadians sweating over hot keyboards. With no benefits and a overbearing boss that brings a cattle prod to work every morning to keep the peons in line during their sixteen hour shifts. While has special assistant hides the employees shoes and sprinkled broken glass outside the building.

Nothing will come of this anyway its my experience in life that any group or organization that use apostrophes in its title is the kind of organization that will never commit to anything. Hell its hard to even be intimidated by such a group without first saying what exactly is it you do again? I am also reasonably sure such a group also accumulates pointless tasks then need never be assigned.

I live in Canada, Bleed Hockey, so just one thing left to say

Go Canada

canada also has like free health care or something, I watched that sicko movie, it was an eye opener! sounds like canada is the place to be right now

Can you please sum all this up in a paragraph please? Sorry, it flew right over my head.

And I HOPE this won't become a country vs. country thread.

It's not exactly free (charged 6% federal tax for it) but it is great nonetheless.

I wonder what WTO principles Canada is violating? 

It's far from free, and many people with serious illnesses come to America because they can't recieve treatment quick enough in Canada.

Imagine healthcare run by the government.  Going to a hospital would be like going to the DMV.  Okay, it wouldn't be  that bad, but it's still not so great.