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New Tax Incentives a Boon to Digital Entertainment in Georgia

FOR IMMEDIATE RELEASE

ATLANTA, GA, March 20, 2006 - The Georgia legislature recently enacted tax code changes allowing digital entertainment producers, including computer game companies based outside of the state, to reap a significant saving on products made there. Many states encourage film and television work, but Georgia also revised its tax code enough to include development on interactive entertainment.

This amendment to the tax code indicates how strongly Georgia is committed to the marriage of technology and entertainment, said Greg Torre, director of the Georgia Department of Economic Development's (GDEcD) Film, Video & Music Office. "We see interactive entertainment as a vital element in the entertainment industry as a whole. Since Georgia has colleges and universities dedicated to cutting-edge technology sitting alongside mainstays in the broadcast industry, this tax incentive seems an ideal way to highlight the fact that Georgia can be an incubator for new and exciting entertainment technology. All the resources are here. Now, we help publishers afford it."

The incentive takes the form of a credit on Georgia income taxes. Both Georgia-based and non-Georgia-based companies with limited tax liability can transfer them to a Georgia company, as long as the transferor recoups at least $.60 on the dollar. Unlike some tax incentives that only affect the publisher and final consumer product, Georgia's tax code qualifies even expenditures on editing, animation, coding, special effects, sound and other costs generated while creating an entertainment product distributed commercially outside of Georgia.

Qualifying companies earn a state tax credit for nine percent of the base investment for production in the state. Eligibility is determined on a "per project" basis, and each project counts toward the $500,000 minimum investment per filing year. If the project employs Georgia residents, the company can get an additional credit for three percent of the aggregate payroll of all Georgia residents employed on the project. Contract labor is eligible for only the nine percent based investment credit. In addition, companies who make the investment in designated Tier 1 and Tier 2 counties (like Atlanta's Fulton County) are eligible for another three percent. A map showing Tier 1 and Tier 2 counties is available from the Georgia Department of Economic Development upon request.

Georgia is already home to Blue Heat, a prolific developer of mobile phone games; GameTap, a pioneering network in providing video games through streaming technology; Kaneva, a 3D-game engine builder; Persuasive Games, a leading producer of public policy games; RoosterTeeth Productions, a production company at the forefront of Machinema (using video characters to make short films delivered via the World Wide Web); and Studiocom, developer of some of the largest advertiser-subsidized game and entertainment environments on the Internet.

The Georgia Department of Economic Development (GDEcD) is the state's sales and marketing arm, the lead agency for attracting new business investment, encouraging the expansion of existing industry, locating new markets for Georgia products, attracting tourists to Georgia, promoting the state as a point of origination for film, video and recording projects, as well as planning and mobilizing state resources for economic development. For more information, visit www.georgia.org.

CONTACT:

Alison Tyrer

Georgia Department of Economic Development

404-962-4078

atyrer@georgia.org

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