The key point in this article is the 37.5% of payroll costs – refundable tax credit for video game companies. It certainly has been effective with 86 companies and 8,400 jobs created but it cost the Quebec government $100 million last year alone.
Remember, this is a refundable tax credit meaning the company gets the money if it expends the payroll – it has nothing to do with paying taxes.
I assume that the Quebec government has done some kind of multiplier analysis that they use to justify this incentive level. Or maybe they are just trying to build an industry – without worrying about the taxes it will generate – in the hopes that in the long term it will stick in the province (even if the incentives are lowered/eliminated).
I’m not sure but it makes the competitive landscape for this sector very complicated. NS, PEI, ONT and BC have all put similar incentive programs in place to compete for such a glamorous industry.
Regardless, there are 8,400 game developers roaming around downtown Montreal. That is impressive.