BC government extends tax credit for digital media companies to cut employment costs

People in tech working
Minister of Innovation says tax credit will help nearly 250 companies in the province.

The British Columbia government is extending the interactive digital media tax credit for another five years to lower employment costs for tech companies.

The interactive digital media tax credit is a refundable tax credit equal to 17.5 percent of eligible salary and wages in the province. It was supposed to expire this year after being introduced in the province in 2010 and receiving multi-year extensions in 2015 and 2018. This year’s extension, which is part of Budget 2023, will allow the program to operate until 2028 to continue lowering costs for talent as the tech sector conducts more layoffs.

“The Interactive Digital Media Tax Credit…will help close to 250 companies in our province.”
– Minister Brenda Bailey

British Columbia’s tech industry has not been spared from mass termination events. Earlier this year, social media management company Hootsuite swapped CEOs and made three rounds of layoffs within six months. In February, Dapper Labs cut another 20 percent of its full-time employees, after previous layoffs in November 2022. Other Vancouver-based companies that made reductions to its staff within the last year include Thinkific, Dooly, and Unbounce.

The digital media tax credit is specifically designed for companies that create “interactive digital media products.” Examples of companies that qualify are those creating video games, educational software, edutainment products, or simulators.

“Supporting digital media companies by extending the Interactive Digital Media Tax Credit lowers their business costs and will help close to 250 companies in our province,” said Brenda Bailey, British Columbia’s Minister of Jobs, Economic Development and Innovation. “As a former tech CEO, I understand both the importance of this extension for our tech hubs and the critical role the sector plays in creating a strong economy.”

According to the provincial government, British Columbia’s digital media sector employs more than 14,600 people throughout the province and generates $2.3 billion in global sales annually.

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As more people look for work, British Columbia’s unemployment rate slightly moved up, from 4.40 percent in February to 5.10 percent in March. Though recent layoffs have made a significant impact on the province’s labour market, unemployment in British Columbia this month is still low compared to pandemic levels, which saw unemployment peak at 13.30 percent in May 2020.

Other Canadian provinces that offer a similar tax credit are Ontario, Québec, Nova Scotia, as well as Newfoundland and Labrador. In Alberta, the United Conservative Party is looking to bring a digital media tax credit back after first scrapping it in 2019. The NDP first brought the tax credit to Alberta in 2018 and covered 25 percent of qualifying labour expenditures for interactive digital media and gaming businesses.

Featured image courtesy Unsplash.

Charlize Alcaraz

Charlize Alcaraz

Charlize Alcaraz is a staff writer for BetaKit.

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