New tax credit threatens future of visual effects and animation industry in Quebec

Quebec’s visual effects and animation industry is far behind internationally – and industry members are voicing their concerns.

The industry is facing major revenue loss and reduced competitiveness they explain, after the government of Quebec’s last budget.

As of May 31, there will be a 65 per cent cap on eligible expenses, which represents a 28 per cent cut in tax credits for the province’s international clients.

Quebec’s visual effects and animation industry has over 8,000 employees, with an average salary of $82,000.

According to a press release, the industry generated over $1.4 billion in revenue last year.

“Quebec has succeeded in positioning itself as one of the industry’s three major global hubs.  It’s an industry, apart from video games and film production, and accounts for 40 per cent of the creative industries’ GDP,” reads the press release.

Tax credits

For every dollar given as a tax credit by the government, the visual effects and animation industry generates $6 directly in Quebec’s economy. Following the withdrawal of the tax credit, the Quebec economy will lose $6.

“We’re about to deprive ourselves of an industry that returns six times more money to the Quebec economy than it costs to offer the tax credit.  What’s more, this is new money from abroad,” the press release states.

Industry members claim the tight deadline left no room for the industry to adapt and will force the industry to pressure its clients, major Hollywood studios, because they must submit their applications before May 31.

“Quebec’s visual effects and animation industry is world-renowned for its talent, its expertise, its technical resources and its overall service offering for international studios,” said Rodeo FX President and founder Sébastien Moreau. “Unfortunately, despite the immense talent in Quebec, a region’s competitiveness is determined by tax incentives.” 

The new adopted measure will limit Quebec’s access to the more “important” projects because they’ll be completed elsewhere.

Visual effects and animation employees fear that workers will move to more competitive areas such as Ontario, British Columbia, France, and the United Kingdom.

“Already some of our clients have told us that our bids are no longer competitive. All the Quebec studios have had the same kind of feedback over the past two months,” said Mergers and Acquisitions Transition Cinesite Director Véronique Tassart. “The survival of the industry in Quebec is now extremely precarious.” 

The industry is asking Quebec Premier François Legault to postpone the tax credit reduction until Jan. 1, 2025.

Workers claim that this delay will allow the government to work with the industry to produce an alternative measure that will satisfy the government and ensure the industry’s sustainability in Quebec.

Their request has been sent but the industry has yet to receive an official response.

“We are extremely worried about the future of our studio and the industry at large in Montreal. If the situation is not rectified quickly, Quebec’s attractiveness to international producers and studios will decrease exponentially,” concluded Managing Director of Canadian Activities at Framestore Canada Chloé Grysole.