Seagate Sends Employees’ Payroll Information After Phishing Scam

Seagate is known for many things, but most of all they are known for their hard drives. I would recommend you look elsewhere if you are looking for something a little more secure I would say avoid them for now as it’s been revealed that employees’ payroll information was sent out after a phishing scam.

Phishing is the act of pretending to be someone else, asking for details (normally bank details or contact information) in order to gain access to information you normally couldn’t. From Nigerian Princes to Sergeant in the Army, they use anyone to obtain information. This time, the email claimed to be from Seagate’s CEO Stephen Luczo requesting data about current and former Seagate employees.

Believing the email to be genuine, the employee responded with the W-2 (Wage and Tax statement) documents. With the scope currently set at “several thousand” employees, the company has been working with federal law enforcement agencies since the incident on the 1st March. To help support their employees, two years of credit protection has been provided on the off chance that their data is used.

With most details of this nature being used in returning fraudulent tax returns with the IRS (something which is made all that much easier by being hacked recently), it could cost the government thousands if they don’t catch the culprits involved.

IRS Hacked By The Same Issue They Were Protecting People From

Last year the US Internal Revenue System revealed that they had been hacked. At first they said that up to 100,000 people were affected by the hack, only to then bump that up to 334, 000 in August. The latest figures put that closer to 724,000 and set to only get worse as it seems they have been hacked yet again.

When filing a tax return you are now required to provide the “Identity protection PIN” that you are given by the IRS. These are specific codes given to people to place on tax returns, failure to do so invalidates the tax return and the IRS will reject it. Sounds like a good idea doesn’t it? So what happens when the IRS’s record of these secret PIN’s are hacked?

Becky Wittrock, an accountant in South Dakota, went to file her tax return this year only to find that the pin had already been used to file a “large refund request” more than three weeks prior. How did the hackers get access to the PIN? Seems that if you lose your PIN you can retrieve it by logging into the IRS website. Seems this is where the problem lies, as the technology used to secure this login process is the same technology that was breached last year.

That’s right, in order to protect people from a hack the IRS used the same technology that was breached by that hack. In order to retrieve your PIN you were asked questions (known as KBA or knowledge-based authentication) such as “on which of the following streets have you lived?” and other multiple choice questions, a system that allowed a hacker to answer the questions correctly.

Seems like a big mistake for the IRS to make, costing both the government and hard working people time, money and stress because they didn’t check that their fix didn’t use the very thing that got them into trouble in the first place.

Apple Agrees to Pay €318m in Italy Tax Fraud Case

Apple’s behaviour in regards to tax avoidance has alerted the Italian authorities due to irregularities in their tax bill which led to a thorough investigation. In a similar vein to other multinational corporations, Apple has been accused of engaging in complicated measures to avoid paying tax which they have a legal right to pay. Of course, Apple isn’t the only company employing such unscrupulous activities as this is a common theme across numerous big businesses. According to La Repubblica and translated by the BBC, Apple failed to pay €880m in tax between 2008 and 2013.

This is just another example of Apple’s strategy, as the company has been “parking” revenues in Ireland which has a significantly lower tax rate (12.5%) than the USA and Italy. Italian investigators found evidence of wrongdoing and a massive gap between the company’s revenue and taxation. Shockingly, Apple’s revenue exceeded €1bn between 2008 and 2013 but only paid a mere €30m in tax. In lieu of the strong evidence, Apple’s Italian division has agreed to settle for €318m in court and avoid any further legal proceedings. This demonstrates that Apple is admitting the error of their ways and knows that they didn’t pay the correct amount of tax. Hopefully, this sends a clear message to other companies as well as Apple to stop trying to avoid paying tax in the future.

Apple CEO Tim Cook Refutes Tax Avoidance Claims

Apple has been accused of tax avoidance and exploiting loopholes in US legislation to move profits to tax havens. For example, Apple’s tax base is in Ireland with a 12.5% corporate rate while the US taxation figure is around 35%. As a result, some critics have argued this is a sophisticated way to either delay paying tax or reduce Apple’s bill. Recently, Tim Cook described the current US tax system in an interview with Charlie Rose on the programme 60 Minutes:

“This is a tax code, Charlie, that was made for the industrial age, not the digital age. It’s backwards. It’s awful for America. It should have been fixed many years ago. It’s past time to get it done.”

Cook became quite aggravated and described the claims of tax avoidance as:

“total political crap.”

He also went onto say that moving the assets into the US would have severe financial implications:

“Because it would cost me 40% [in taxes] to bring it home. And I don’t think that’s a reasonable thing to do,”

Clearly, Tim Cook believes that the current US tax system is completely broken and in need for huge reforms. Not only that, he made bold statements about Apple’s behaviour and the amount of tax they put into the US economy:

“There is no truth behind it. Apple pays every tax dollar we owe,”

“We pay more taxes in this country than anyone.”

This is an interesting statement to make, and the idea that Apple pays a large amount of tax seems fairly credible. However, the amount paid is due to how successful Apple is compared to other companies. What really matters is the percentage of tax paid in regards to Apple’s total earnings. Are they actually paying the full amount, or employing complex schemes to maximize profits? Sadly, I don’t think we will ever know unless there is an independent investigation.

Image courtesy of newspaperplus.com

Mozilla Describe Thunderbird Client as “a Tax” on FireFox Development

Mozilla’s Thunderbird e-mail client is often overlooked and hasn’t received any major updates since 2012. Nevertheless, I still find it quite useful and think it’s a pretty good piece of software to organize multiple e-mail accounts. Clearly, Mozilla is right to focus on Firefox development as a large quantity of people view their e-mails on mobile devices or through a web browser. While Mozilla has ceased active development of Thunderbird it still appears to be having a detrimental effect. For example, Mozilla’s chairperson, Mitchell Baker said in a memo published on the company’s public governance forum:

“Many inside of Mozilla, including an overwhelming majority of our leadership, feel the need to be laser-focused on activities like Firefox that can have an industry-wide impact. With all due respect to Thunderbird and the Thunderbird community, we have been clear for years that we do not view Thunderbird as having this sort of potential.” 

“Given this, it’s clear to me that sooner or later paying a tax to support Thunderbird will not make sense as a policy for Mozilla.”

“The current setting isn’t stable, and we should start actively looking into how we can transition in an orderly way to a future where Thunderbird and Firefox are un-coupled.”

Baker’s comments here suggest that any resources or support going into the Thunderbird project will end fairly soon. From the wording, it’s clear they don’t want to just abandon it and looking for other alternative strategies. It makes sense to focus on Firefox especially with the huge competition from Google and Microsoft. To put this into perspective, I personally use Thunderbird to manage one personal and two business e-mails. I would be sad to see it go as it’s easy to use, and quite functional.

Facebook Only Paid £4327 Corporation Tax in 2014

Facebook has paid its 362 UK staff members a staggering £35.4 million in share bonuses according to the Companies House filing. Additionally, the company reported fourth-quarter profits of $701m (£462m). Despite this, the official figures show Facebook only paid £4327 in corporation tax during 2014. To put this into perspective, this amount is less than the income tax and national insurance contributions of the average UK salary. This totals at £5392.80 compared to Facebook’s pathetic payment of £4327.

Obviously, Facebook isn’t the only major company guilty of not paying the correct taxation and employing loopholes to offshore assets. Although, the numbers exemplify how ridiculous the behavior of many technology giants is. Public outrage has applied pressure on the UK government to tackle these awful tax schemes. Although, I can’t see anything changing on a huge scale. If companies can get away with avoiding tax, and maximizing their profits, they will. Perhaps, a different tax system is needed to ensure large corporations pay their way.

It does seem unfair that consumers contribute to the economy and pay their taxes while massive companies can behave as they wish. Hopefully, as more stories emerge about the lack of taxation paid, it could shame companies into acting more responsibly.

Thank you BBC for providing us with this information. 

Apple Reigns Supreme at US Tax Avoidance

The legality and moral outrage surrounding tax avoidance has been a hotly-discussed topic throughout the world. Many leading corporations from Apple to IBM exploit loopholes in the tax system to reduce their bill and hold assets offshore from their US base. As a result, this net revenue isn’t taxable and allows for increased profits. Sadly, many companies refuse to publicly disclose the nature of moving assets offshore, but new data provides evidence regarding the top 30 US companies who didn’t object to this information going public.

In the US, this data was collated by the Center for Tax Justice’s analysis of SEC filings. As you can see from the graph, Apple came in 1st place moving $181 billion of taxable assets offshore to avoid paying taxation. This is a significant margin ahead of other companies but might simply refer to Apple’s financially strong situation. The chart contains a wealth of technological companies and signifies how tax avoidance is commonplace in the industry. In recent years, governments have promised to clamp down on tax avoidance due to public pressure.

However, very rarely does this result in any meaningful change. Only recently did Amazon start paying corporation tax in the UK after a long period of employing complicated tax schemes. I highly doubt the data will deter people from buying Apple products but it emphaizes how their company and similar technology behemoths are run. From a business standpoint, if a company can maximize their profits, they will within the confines of the law.

How do you feel about technology companies avoiding taxation?

Thank you Quartz for providing us with this information.

Tax Credit Refund Scam Is affecting UK Based Individuals

Tax credits are a hot topic at the moment, this is in part to the Conservative death by a thousand cuts, I said cuts, plans which are set to reduce the income of many of the poorest in society by an average of £800 a year. Unfortunately, the adverse media coverage has been picked up by scammers who have devised a fraud which promises tax credit refunds.

Individuals have received messages within the last few days to a week which utilizes the Goo.gl shortening URL to redirect victims to what appears to be a compromised website: The message reads “Dear valued customer, we are happy to inform you that you have a new tax credit refund from HMRC. Click on the following link [URL] to claim your HMRC refund”

These messages have been sent via texts although you may want to keep a look out for other forms including emails in case the scammers diversify. The stats are below concerning this fraud, as you can see, it’s shocking to note that there have been 731 clicks so far considering the scam is pretty new.

  • 731 clicks so far, with the majority of them coming from the UK.
  • 440 of those were on iPhone, and 252 were using Android. Just 31 people were browsing via Windows.
  • The shortened link is around 1 week old, so the scam is pretty fresh.

The phishing page is located at – savingshuffle(dot)com/hmrc/Tax-Refund(dot)php:

The scam page appears to be from HMRC, but to be clear it is certainly NOT from the official government-backed site. The page would like many personal details which includes the following

  • Name
  • Address
  • Phone
  • Email
  • telephone number
  • card details,
  • Sort code and account number.

Scroll further down the page and the scammers would also quite like a piece of “Identity Verification” in the form of a driving license number, national insurance number and mother’s maiden name. There’s also a pre-filled refund amount of £265.48 next to the submit button.

This is fake; this is a scam and please DO NOT under any circumstances click on any link which purports to offer any kind of refund. The official HMRC do not send any messages which purport to offer any kind of refunds in the first place. An official bank or government-backed service wouldn’t start a message with the words “Dear Valued Customer” Also, be aware just in case you receive a message with your name offering a refund, this would also be a scam with absolute certainty.

There will be inevitably more variants of this scam which prey on people’s financial circumstances; always be suspicious.

Thank you malwarebytes for providing us with the information.

RFID Road Stickers To Help Malaysian Authorities Track Cars

4 years ago it was suggested that people could use RFID windshield tags to help pay for everything from parking to checking if you have permission to actually go into a car park. Seems like Malaysia is looking at using a similar technology now to help track and monitor vehicles.

The system will run a pilot programme at a border checkpoint this October but could expand to cover all of Malaysia by the end of 2018. The sticker will be in the same shape and form as a road tax sticker and could be used to track all vehicles within the country, even going so far as to shatter and transmit warnings if you try to remove it.

The device is suggested for multiple uses including data analysis, tracking things such as the location of traffic jams and monitoring average speeds of roads and junctions.

The objections that currently are appearing to this scheme are the same that come out when any monitoring program is released or announced. By placing a tracker on every car, you could monitor specific people, even those who have done nothing wrong. While the details and identification codes for each tag and car would be encrypted, in light of recent news regarding digital monitoring and hacking, we are all far too aware that there is very little that can be called “secure” in the modern world.

Thank you Engadget for the information and the image.

US Internet Tax Ban Could Expire This Year

The US House of Representatives has passed a law permanently banning the collection of local and state taxes on internet services. The Permanent Internet Tax Freedom Act still has to pass the Senate before it can be received by President Obama and signed into law. While pre-empting states and local government from creating an Internet Tax, the current situation of regular goods and services taxes being applied to internet access remains. PITFA works by indefinitely extending the lifetime of the Internet Tax Freedom Act which expires in October.

As the result of the FCC enforcing net neutrality via the reclassification of the internet as a communications service, cash-strapped local and state governments may be tempted to levy communications taxes on internet service. According to the bill’s sponsors, communications taxes are among the highest with an average of 13.5%, nearly double normal goods and services taxes. As internet service becomes more and more necessary in daily life, charging an extra tax on it seems more and more unnecessary.

Congress had taken at stab at extending an act like PITFA last term, but opposition in the Senate killed the bill. The bill now faces an uncertain future in the Senate which may force another compromise short-term extension. Few countries currently have a special internet tax with Hungary failing to implement an internet tax after heavy protests last year.

Image Courtesy of ptmoney.com

UK Government Moves from Microsoft

Microsoft has dominated the business market for some time now. This is the case here in the UK, where most if not all government departments use Microsoft’s products in favour of everything else, but that’s about to change according to recent statements from officials.

Her Majesty’s Revenue or Customs, or more commonly known as HMRC, decided to switch from Microsoft products to what Google now has to offer. The change will take place due to the fact that Google has more power over cloud service and it looks like that’s what HMRC needs. This also marks a turning point in business solutions, having HMRC be the first major UK government department to break away from Microsoft services in favour of another competitor.

It is said that the switch will affect over 70,000 employees, who will join another 2,500 Cabinet Office users already on Gmail accounts. Still, there are over 450,000 government employees using Microsoft products, so we won’t see the majority of departments dropping Microsoft’s products overnight. But this does prove that Microsoft is declining in strength over corporate business solutions.

In terms of security, UK government officials seem to trust Google’s own security and ability to keep sensitive information safe on its data centres, but is this a good thing? They seem to think so. However, they should also take into account that mixing cloud storage with sensitive information may not seem a good mix, especially when your tax information is in the middle of it. What are your thoughts on the matter?

Thank you Engadget for providing us with this information
Image courtesy of Robson Scott Associates

Amazon is Now Paying Full UK Taxes

The company that wants to bring us drone deliveries and deliveries to our cars has now changed its ways in terms of paying taxes. Up until recently, Amazon sifted sales through Luxembourg as to avoid profit Tax. In 2013, Amazon booked a huge £4.7 billion of UK sales through Luxembourg which resulted in a relatively miniscule £4.7 million to pay in UK taxes.

According to The New York Times, Amazon will be rolling this out across Germany, Italy and Spain. “Although potentially Amazon will pay more tax in each of those countries, there are still ways for it to minimise its tax bill, for example by setting the cost of “licences” to the main US company for the use of trademarks against profits—a common accounting technique among international companies with branches overseas. This means the tax paid by Amazon in the UK may still not be that significant.”

The most likely reason for this is to cut short an investigation into the company from the tax arrangements with Luxembourg. Although the investigation is still in early stages, formal action by the European Commission could lead to forced changes in its EU practices; voluntary changes would make a lot of sense.

How do you feel that global companies are essentially dodging tax? Should they all be made to pay or should some companies pay less or more? Let us know your thoughts in the comments.

Thank you to ArsTechnica for providing us with this information.

US Healthcare.gov Sends Wrong Tax Information to 800,000 People

In another example of how the US government can’t deploy major tech initiatives without some sort of major mishap, the ever troubled Healthcare.gov site has sent incorrect tax information to 800,000 users.

All of those users received tax details that were incorrect in some way, and have been told to wait before filling their taxes this year. According to The New York Times, all of those affected have been contacted and told to read this for further information. Apparently, they’ll be getting replacement details, with the correct information, early next month.

Healthcare.gov has been pretty much in a mess right from the get-go. What initially seemed like a forward-thinking and efficient online way to ensure people have health insurance, turned out to be a nightmare. Not because of policy, but because of poor web design and management. There have been security lapses and massive bugs meaning people couldn’t sign up and now this.

Let’s hope this is last of Healthcare.gov’s calamities.

Source: The Next Web

UK to Introduce 25% ‘Google Tax’

George Osborne, Britain’s Chancellor of the Exchequer, announced during his Autumn Statement that the Conservative government are to introduce a 25% ‘Google tax’ to prevent multinational corporations from tax dodging.

Companies such as Google, Amazon, Starbucks, and Vodafone have all been accused of paying less tax than should be expected of them. The move is designed to close the loophole that companies operating in the UK have been taking advantage of. “Today I am introducing a 25 percent tax on profits generated by multinationals from economic activity here in the UK which they then artificially shift out of the country,” said Osborne. “That’s not fair to other British firms. It’s not fair to the British people either. My message is consistent and clear. Low taxes; but taxes that will be paid.”

The tax is estimated to generate £1 billion over the next five years, and will come into effect from 1st April, 2015.

Source: ars technica

Worldwide Bitcoin Regulations Still Unclear, Law Library of Congress Survey Reports

There were many questions on how can the Bitcoin be taxed, having more and more countries coming up with different ways on how the cryptocurrency could be treated. While countries such as Germany do not consider Bitcoin a legal tender and cannot be considered as taxable income, Canada was pro-taxing Bitcoin incomes.

“At the moment, we’re studying Bitcoin and we have no plan to issue a regulation on it,” a spokesperson for the Bank of Indonesia told the Jakarta Globe in December.

Law Library of Congress has surveyed 40 jurisdictions and the European Union to see what laws have been implemented for the Bitcoin all around the world. They found that China has declared it illegal to use Bitcoin as a currency, while Brazil has successfully adopted and made regulations for it, having been adopted under Law No. 12,865. And while the U.S. is the place where most Bitcoin makers and users are, the New York State Department of Financial Services are said to be in talks to consider Bitcoin-specific regulations.

While we see most countries accepting or letting Bitcoin have its way for the moment ( and of course China that bans just about anything that looks democratic ), the U.S. might be preparing something to take a bite out of every profit made through Bitcoin, especially having more and more companies starting to accept cryptocurrency payments.

Thank you The Verge for providing us with this information

British Creativity Showcase Could Help UK Games Sector Get Tax Production Credits

Ukie have given their approval and joined forces with the IPS and many other UK creative industry bodies with the launch of a government backed portal which aims to showcase the very best of the UK creative industry, including movies, TV and videogames. The Ukie is especially calling for games businesses to tell their stories on new government backed website as part of a ‘Year of Creativity’. The new site provides a central resource hub linking the industry, UKTI (UK Trade and Investment) global agents and the FCO (Foreign and Commonwealth Office) after new statistics published this week revealed that the UK’s creative industries collectively generate a staggering £8 million an hour for the economy.

Speaking at the launch event, Ukie CEO Dr Jo Twist said, “With the tax production credits for the games industry still on the agenda, this portal offers a great opportunity to showcase the UK’s games sector, as part of the wider creative industries, to a global audience. The UK games and interactive entertainment industry is world class. We make the biggest selling and most creative entertainment products, we have the right business environment and a fantastic blend of creative talent to make globally successful exports.”

Ukie is helping the IPA collate more stories, case studies and facts from UK games businesses, from both rising stars and established companies, to be featured as part of the games industry section of the new site. Given that the UK plays host to many of legendary and award winning gaming studios, it shouldn’t be hard for them to find a few. With the games industry in the UK declining over many years, with many developers leaving to work in countries with a lower tax rate on games development this could be a great thing for the UK.

[youtube]http://youtu.be/-Dr_7OhMQCs[/youtube]

Thank you The Creative Industries for providing us with information.

Ukie Urges Government To Push Games Production Tax Credits Through

UK games and interactive entertainment trade body calls for final push to get games production tax credits in place. Responding to today’s autumn statement by Chancellor George Osborne, Ukie CEO Dr Jo Twist welcomed plans to cap any increase in business rates and to abolish national insurance contributions for young people. Noting the boost to film tax relief that was announced, Dr Twist called on the government to continue doing everything possible to push through the introduction of games production tax credits, as announced in the 2012 Budget.

“Anything this government can do to keep business costs down and help companies of all sizes flourish is positive, so it was good to hear today that any rise in business rates will be capped, that small businesses will be able to pay rates monthly, and that national insurance contributions will be abolished for under-21s. Combined with support from the Skills Investment Fund Trainee Finder Scheme, this should make it a great deal for games companies bringing talented young people into the industry.

“However the announcement of an extra boost to film tax relief reminds us that the most important thing the government can do for the games and interactive entertainment industry right now is give the final push to the games production tax credits through the European Commission, and get this vital support for the UK development sector in place at last. We have been working closely with the teams in the Treasury, HMRC and DCMS, and know they are doing all they can to convince the European Commission of the strength of our case. Today’s statement is a reminder of the need to see this through and get these long-awaited tax credits out to developers.”

Dr Twist added: “It was also heartening to hear a renewed commitment to STEM skills, but we will continue to push for the inclusion of art and STEAM through the work of the Next Gen Skills campaign”.

The Chancellor also committed to helping more UK companies do business overseas and increase exports. Ukie has been at Game Connection Paris this week running the UK Industry Stand at the business event. More than 30 British businesses of all sizes have been exhibiting in the UK area and Ukie, as the UKTI official TAP grant partner, has saved them over £34k attending and exhibiting. Ukie will also be running the UK Industry stand at GDC in San Francisco.

The games industry has fallen some tough times over the last few years here in the UK and many developers have either moved outside of the UK or simply shutdown. These new incentives could help change that and bring more developers back into the UK in the future.

Thank you Ukie for providing us with this information.

Image courtesy of Ukie.

Apple Controversy Pushes Ireland To Alter Company Tax Laws

Apple make billions in profit every year and one would expect they would pay a sizeable amount of that in taxes, but they don’t, or at least no where near what they should. Apple use Ireland to lower their tax bills and by setting up a their company there they can take advantage of low tax rates, while also avoiding paying US taxes since the company is technically not a US tax resident, even though we all know Apple clearly operates out of the US.

Apple are not the only company to use this tax trick, but they’re the one catching all the headlines given their relative size and huge yearly profits. The Irish Finance Minister Michael Noonan has promised to amend the country’s corporate tax laws, bringing peace to the controversy that surrounds US companies using the country to lower their tax bills.

“I will be bringing forward a change to ensure that Irish registered companies cannot be ‘stateless’ in terms of their place of tax residency. Ireland wants to be part of the solution to this global tax challenge, not part of the problem.” said Noonan at the 2014 budget in Dublin.

This isn’t the end of the issue of companies paying the right amount of tax in the correct country, but it certainly is a step in the right direction to stop major corporations from playing the system.

Thank you Mashable for providing us with this information.

Twitter Reports Very Low UK Profits, Believed To Be Routing Through Ireland

Twitter is a huge company and one of the biggest social media presences across the world, and in the United Kingdom. Yet this year they have reported retained profits of just £92,408 in the UK. Which is about three times the average salary of a single UK citizen.

The Guardian points out that Twitter’s UK profits are staggeringly low and that it seems likely they are channelling profits through Ireland to benefit from lower taxes there. While the company has not officially confirmed this it seems likely given that Google actually does a similar thing.

Twitter is currently not listed on the UK stock market so has no obligation to give further public explanation of their finances. Though HMRC could choose to investigate further if they so wish.

“Since Twitter UK opened in 2011 we have been steadily building our team, focusing on promoting great uses of Twitter by all elements of UK society – the arts, sport, government and brand partners,” a spokesperson for the company said.

This is yet another example of companies in the UK screwing the tax system. Twitter join the likes of Google, Starbucks, Costa, Amazon and many others that benefit immensely from the large UK market yet pay very little on what they earn, using a variety of covert and shady methods to avoid taxation.

Image courtesy of Twitter

Ukie Outlines Urgent Case For UK Game Development Tax Credit

Ukie has used their response to the EC investigation to outline why there is a clear and evident market failure relating to the production of culturally British or European games being made by British studios, which the UK Government’s proposed games production tax credit scheme would address.

Ukie have set out the following reasons why the EC’s doubts are misplaced and why the aid should be approved as soon as possible:

  • Games play an increasingly important role in the lives of many consumers across the world and as the Commission itself has previously recognised, games can play an important role in promoting European culture.
  • In the past, games were often regarded as spin-offs from other cultural outputs such as films and music. Increasingly, successful games are now driving other outputs such as films and television series with the consequence that a lack of European cultural representation in the global games market may in time also reduce Europe’s influence in other culturally important areas.
  • Games are one of the most important ways in which children engage with and learn about the world, yet currently little is done to ensure that they are presented with European culture in these experiences.
  • Games operate in an intensively competitive global marketplace where non-European culture is the dominant, driving force dictating which games are developed.
  • Fewer people are making games in the UK, which means that fewer games are being made here. Because of the UK’s status as a major European hub for games development, this means that there is less culturally European content being created than should be the case.
  • A significant proportion of games developers who may be eligible for the proposed tax credit currently spend the majority of their time “working for hire” for non-European companies or brands, i.e. developing games based on non-European cultural references for the global market. As a result, there is an existing and tangible market failure which has resulted in a lack of culturally European games being created
  • This market failure is being exacerbated year on year, creating a vicious circle: as fewer culturally European games become available, it becomes harder to persuade investors and the marketplace that such games are relevant and can be successful.
  • Ukie considers that the UK’s proposed measure offers the opportunity to reverse that market failure. In particular it is expected that EU-based companies which currently produce culturally non-European games would be able to devote more time to developing European culturally focused games and, just as importantly, are keen to do so.
  • The more such European culturally focused games become successful as a result of the proposed aid, the greater the likelihood that the global industry will in time be prepared to invest in such products, thus removing the need for state intervention in the longer term.
  • Ukie would also note that, particularly in the case of its smaller members and contrary to the Commission’s suggestion, most games are developed solely by UK-based teams.
  • Ukie is strongly of the view that the UK’s proposed tax credit is a targeted, proportionate solution which represents the minimum intervention necessary to address the relevant market failures. Ukie further considers that if the aid is significantly delayed, any subsequent intervention is likely to require far greater resources to achieve similar ends.

Ukie’s full response to the EC investigation can be found here.

Ukie’s response contains evidence from some top British developers and publishers, including: David Amor, Relentless; Ed Bainbridge, former VP, Disney Interactive Studios; Simon Bradbury, Firefly; James Brooksby, Born Ready Games; Paul Canty, Preloaded; Craig Fletcher, Multiplay; Sophia George, Swallowtail Games; Darren Garrett, Littleloud; Richard Griffiths, Rogue Vector; Richard Lemarchand, former Naughty Dog; Ella Romanos, Remode Studios; Jim Rossignol, Big Robot.

Ukie worked closely with DCMS and HM Treasury in creating its response and also made sure that there was a consistent industry voice on this vital issue with TIGA. Ukie also ensured that there was support for games industry tax credits from other UK creative industries who have submitted letters of support

Ukie CEO Dr Jo Twist said: “The UK needs tax credits to make sure that we can reverse the current trend for games being made with non-European cultural themes. As the audience for games increases, it is important that developers of all sizes can make commercial decisions in a financially competitive tax system. Fewer people are making games in the UK, which means that fewer games are being made which advocate our sense of humour, our creativity and our identity as European citizens. We need to have tax credits introduced as soon as possible”.

Ukie Chairman and Chair of Mastertronic, Andy Payne said: “It has never been clearer that the UK needs these tax breaks. Video games have huge cultural reach and are now pushing creative boundaries like no other medium. But unfortunately too many games are now created without British or European themes, a problem that will continue to exist unless we get tax credits introduced. Without tax credit there will be fewer developers operating in the UK, which means fewer British games being made. The case made by Ukie clearly spells this out to the EC and we urge them to get them in place before the situation gets any worse.”

CEO of Remode Studios, Ella Romanos said: “As with many developers we operate part of our business on a work for hire basis. Whilst this remains a valuable revenue stream, tax credits would offer us a real incentive to make our own original IP incorporating British or European themes. We hope that the EC listens to the points made in Ukie’s submission so that we do receive the tax credits the UK industry urgently needs.”

eTeknix says “This is a serious issue for many European and UK based games developers who have over the years been dwindling in numbers, many moving to countries such as Canada where tax breaks allow them to create games on a smaller budget, but also maximise their profits from the sales of the games, leaving the UK out of any hope of developing this industry and as a result loosing out on both taxes and jobs here in the UK.”

Thank you Ukie for providing us with this information.

French Anti-Piracy “Hadopi” Law Being Axed

According to France’s Minister of Culture and Communication the anti-piracy “Hadopi” law only has one more month to live. Aurélie Filippetti has stated that the Hollande administration will axe the Hadopi law in favour of no immediate replacement.

In France the debate over the Hadopi law has been particularly strong and it was supported by President Sarkozy hence how it came to be legislation in 2009. Opponents claim that the bill prohibits the distribution of creative works on the internet and is harmful for the economy.

However, the main reason that has led to the elimination of the law by decree is the fact only three people have been prosecuted with a final judgement of which 2 were acquitted and one was fined €150 but given a penalty waiver. Several others have been accused but not conclusions have been reached and it looks set to stay that way.

An anti-piracy law is expected to re-enter soon by the end of July as a cabinet discussion and for parliamentary debate in September. An “internet connected” tax that is “very moderate” is also being debated by the government too but this will be debated in preparation for the draft 2014 budget. Pierre Moscovici, the Minister of Economy, is hostile towards this project and it seems unlikely it would prevail.

What are your thoughts on the anti-piracy law being axed in France? Do you think it will be replaced? If so, by something “better” or “worse”?

Source, Via

Google Accused Of Advert Tax Evasion In The UK

Google’s lavishly decorated London headquarters

Google’s advertisement service (Google Ads) sells adverts all across the United Kingdom and Ireland. Google claims that all their advertisement services are sold through their Dublin office, as to synchronise taxation purposes all into Ireland where taxation is moire favourable for Google.

However, the media community has been sceptical of this and many have accused Google’s UK branch of dodging tax in the United Kingdom. They had previously claimed that Google’s UK team were actively engaged in making sales and thus Google should be paying UK tax on this, they now have some evidence to prove this assertion.

Google claims its UK staff do not sell adverts, they only provide “sales and marketing support” to those dealing with the Dublin office. In the survey created by “The Drum” they claim that of respondents, 80% said they dealt with the Google London branch when making advert sales while 14% used the Dublin office, presumably the rest did not disclose such which one they used or did not know.

In addition, an in-depth LinkedIn analysis of Google UK and London employees suggests that many of their UK staff are actively involved in the sales process. This makes Google’s statements inconsistent with its tax positions, meaning it is likely they are dodging UK tax.

Google wouldn’t be the first high profile company to be dodging UK tax, joining the likes of eBay, Amazon, Costa, Starbucks and many others currently under investigation for tax evasion.

What are your thoughts on this?

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American VP Joe Biden Says A “Violent Media Tax” Is Legally Possible

Manhunt is among the most notoriously famous “violent” video games of our time. Yet at the core of the word “violent” is a normative judgement that has to be made. What is violent? What would constitute “violent media”? How would you determine acceptable violence? Or would any form of violence denote violent media?

These are just some of the questions we are faced with after the United States Vice President Joe Biden stated that the U.S Government can tax violent media, there is no legal reason why it couldn’t. A Violent Media Tax would most likely be used to discriminate strongly against video games, while TV shows, DVDs music (rap music would no doubt have a hard time escaping) and other forms of media would probably escape. Christian Conservative Americans, who make up a significant proportion of America political lobbying and power, have a particular hatred of “violent” video games and using this tax would be a great way to curb the consumption of them.

It is reported that funds raised by the tax would be used to help victims of gun related violence. Although, from my European perspective, making firearms illegal is surely a  better way to curb gun related violence than to tax video games. In addition, violence isn’t “just about guns”. Relentlessly bashing video game makers who make “violent games” is surely not going to solve anything. The root causes of violence often have very little to do with video games and more to do with socio-economic factors such as prevalence of poverty and quality of childhood parenting.

It also remains to be seen if this violent media tag will be selective. You can most definitely expect Grand Theft Auto V and Manhunt to be taxed for violent media, but America’s Army 3, Delta Force Black Hawk Down and even Battlefield 3 – probably not as these glorify American military interventions. This then comes back to my point at the beginning, who makes the judgement on what is violent media?

No violent media tax is yet present in the form of legislation but we can probably expect to see it emerge soon. Whether or not it has support in the U.S congress is something we will have to wait and see about.

What are your thoughts on this highly controversial topic? I also apologise in advance if you didn’t like any of my opinions, but they are exactly that – opinions, so please feel free to share yours too.

Source

Games Tax Relief to be Introduced in the Current Finance Bill

TIGA, the trade association representing the UK games industry, has welcomed the news that the Government is planning to legislate for Games Tax Relief in the current Finance Bill. It said that its introduction at the earliest opportunity was the videogame industry’s top priority. TIGA also said that the introduction of a £15 million digital competition through the Technology Strategy Board and an increase in the Skills Investment Fund to £8 million would strengthen the UK video games development and digital publishing sector.

Dr Richard Wilson, TIGA CEO, said “Although Games Tax Relief has not yet received State Aid clearance from the EU Commission, TIGA has been assured that the UK Government is committed to this Relief, will be legislating for this Relief in the Finance Bill and will deliver this Relief.

“Games Tax Relief is vitally important because its introduction will enable the UK to compete on a level playing field against our overseas competitors who already have tax breaks. Games Tax Relief will also power investment and job creation and address the market failure in the under-production of culturally British video games.

“TIGA stands ready to work with the UK Government and EU Commission to accelerate the introduction of Games Tax Relief. Businesses need to see the measure introduced as soon as possible to aid commercial planning.

“The increase in the budget for the Skills Investment Fund and the new digital competition will strengthen the competitiveness of the UK games industry. Together with Games Tax Relief they make a helpful hat trick of policy measures.”

TIGA also welcomed announcements that corporation tax would be reduced to 20 per cent in 2015, The Seed enterprise investment scheme would be enhanced, R and D Tax Relief would be increased and the
Employment allowance worth up to £ 2,000 for businesses would be introduced.

This is overall very good news for the UK Economy, the games industry and for few developers that are left standing, or haven’t already moved to more tax friendly locations such as Canada, where games development is awarded massive tax breaks compared to the UK.

www.tiga.org