By Tom Ivan
The UK’s Ministry of Culture, Media and Sport has formally begun an investigation into the legality of Canada's videogame trade practices.
"The UK 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 (WTO) principles," the ministry told the Canwest News Service.
Late last year UK Culture Minister Margaret Hodge warned that the UK could challenge the legality of Canada's generous tax credits so that other nations could compete on a more even playing field. Her announcement addressed increasing concerns that incentives offered in the Quebec region are responsible for the loss of domestic gaming talent.
Hodge said at the time that Canadian tax credits offering Quebec region-based games companies such as Ubisoft and EA up to 40 percent of studio staff salaries refunded via tax rebates could breach WTO laws.
The Canadian Department of Foreign Affairs and International Trade has rejected the claim. "Canada fully complies with its WTO obligations," a spokesperson told United Press International.
