1. QUEBEC’S DIGITAL INDUSTRY: OVERVIEW AND TAX INCENTIVES Marie Claude Bernard, Director Montreal International Game Summit Alliance Jeu @mcbernard

2. VIDEOGAMES AND ANIMATION IN QUEBEC A GLOBAL OVERVIEW

3. Quebec, Cradle of Digital Animation End of 1940s: The National Film Board of Canada 1970: Robert Forget and “Centre Animatique” 1986: Daniel Langlois and Softimage 1994: Acquisition of Softimage by Microsoft 2001 Avid buys Softimage

4. Since then A 600% growth since 2003

5. And today… / 7,000 jobs / 3rd cluster in the world per capita / Over 100 companies / International leaders / 3 new international companies opened up shop in Montreal in 2010

6. VFX IN QUEBEC A GLOBAL OVERVIEW

7. The cluster / Client type: local and foreign film and television producers / Companies: over 40 visual effects and animation studios / Workforce: 2 000 direct industry related positions

8. QUEBEC: A SUCCESS STORY OK, BUT WHY?

9. An ideal location An education system focused on the industry’s needs A very attractive location for employees A highly creative workforce

10. A cost effective location 26,8% lower than Europe 25,5% lower than the USA

11. FUNDING A TRANSMEDIA PROJECT IN QUEBEC – TAX INCENTIVES

12. Multimedia Title Production Tax Credit (Quebec) To foster development of the video game industry and certain distribution platforms Video game production activities Credit of up to 37.5% on total salaries and contractors Refundable

13. Scientific Research & Experimental Development (Canada) Federal (Canada) R&D tax credit rate ranges from 20% to 35% Refundable or not Salaries, contractors, materials, capital equipment Proxy amount (65% of salaries incurred)

14. Scientific Research & Experimental Development (Quebec) Québec tax credit rate ranges from 17.5% to 37.5% Refundable Salaries and contractors

15. Comparative Table SR&EDCanadian-Controlled Private Corp (CCPC) Large Corporation PROVINCIAL – always refundable Salaries37.50%17.50% Contractors18.75%8.75% R&D contract with universities28.00% FEDERAL – refundable for CCPCs Salaries43.63%19.50% Contractors28.44%18.25% SR&ED contract with universities25.20%14.40% Indirect materials and equipment35.00%20.00% TOTAL Salaries82.13%47.00% Subcontractors47.19%27.00% SR&ED contract with universities53.20%42.40% Indirect materials and equipment35.00%20.00%

16. Comparative Table Potential Credits per 100$ R&D Investment – Quebec CCPCNon-Resident Held SalariesUp to 82$Up to 47$ SubcontractorsUp to 47$Up to 27$ Material consumed/Equipment rentalUp to 24$Up to 20$ Capital assetsUp to 35$Up to 20$ University Research ContractorsUp to 53$Up to 42$

17. University and Pre-Competitive Research Tax Credits (Quebec University 28% of total R&D expenses (same expense base as for federal purposes) Pre-competitive research 35% of total R&D expenses (same expense base as for federal purposes) To promote R&D partnerships amongst corporations

18. E-business Tax Credit (Quebec) Eligible information technology activities 30% credit rate Refundable Maximum of CDN$66,667 per employee (credit of CDN$20,000) Can be cumulated with R&D credit (different activities)

19. Foreign Researcher Tax Holiday (Québec) 5-year personal Québec tax holiday (up to 24%)

20. Canada Media Fund To champion the creation of successful, innovative Canadian content and software applications through financial support and industry research 2 streams : convergent and experimental 330M$: 27M$ for the experimental stream

21. Quebec Tax Credit for Film Production Services 25% of eligible all-spend production costs including qualified labour costs and costs of qualified properties Improvement for computer-aided special effects and animation and shooting of scenes in front of a chroma-key : extra 20% of qualified labour costs

22. Refundable Tax Credit for Film Dubbing 30% of qualified expenditures

23. Canadian Video of Film Production Tax Credit 25% of qualified labour expenditures

24. Film of Video Production Services Tax Credit 16% of qualified Canadian labour expenditures To encourage the employment of Canadians

25. For more information… Marie Claude Bernard mcbernard@alliancenumerique.com @mcbernard mcbernard@alliancenumerique.com