Corporate taxes can be messy and complex due to the government’s desire to pick winners and losers in different industries. While the U.S. has the highest corporate tax rate in the world, very few corporations actually pay the nominal 39.2% rate. General Electric, a huge winner when it comes to government subsidies, has in some recent years paid a 0% rate due to breaks and subsidies.
Sometimes a government’s policy of picking winners results in amusing results. Great Britain’s Chancellor of the Exchequer revealed their new corporate tax policy outline – and they’re going to be giving new massive subsidies to video game developers:
2.73 Corporation tax reliefs for the creative sector – The Government announced at Budget 2012 that, following consultation on design, it would introduce corporation tax reliefs for the video games, animation and high-end television industries from April 2013, subject to state aids approval. Under these reliefs, qualifying companies will be able to choose between an additional deduction at a rate of 100 per cent of enhanceable expenditure or a payable tax credit at a rate of 25 per cent of qualifying losses surrendered.