Quebec’s Visual Effects and Animation Industry Faces Uncertainty Due to Tax Credit Changes

Quebec’s Visual Effects and Animation Industry Faces Uncertainty with Tightened Tax Credits

The visual effects and animation industry in Quebec is in turmoil after the province announced tighter tax credits in the recent budget. Industry leaders are sounding the alarm, warning that this change could have devastating effects on local companies.

Jeremie Lodomez, the global head of 2D film at Framestore, expressed his concerns, stating that the industry stands to lose 35% of its annual budget for next year. “What I fear is that we lose everything that we built for the last 15 years,” Lodomez said.

Effective May 31, Quebec will impose a 65% cap on eligible expenses for the sector, leading to major revenue loss, reduced competitiveness, and the potential loss of home-grown talent. Members of the industry fear that this change could result in a 28% cut in tax credits for international clients.

Michel Murdock, president of Hybride, a Montreal-based subsidiary of Ubisoft, criticized the province for failing to consult the industry before making this decision. “Instability is another factor. Making a change that quickly has a real impact on the reputation of the province and our business,” Murdock said.

The Quebec Ministry of Finance defended its decision, stating that it is about refocusing tax incentives in the film industry overall. While acknowledging the impact on the visual effects sector, the ministry called it the “responsible choice.”

Industry veterans like Michael Borhi, global head of texturing at Framestore, emphasized the talent and creativity of local FX artists in Montreal. Borhi urged the province to recognize and support these artists.

In response to the budget change, the industry is asking the province to postpone the effective date of the tax credit adjustment until January 1, 2025. This would allow the government to work with the sector to develop a measure that benefits all parties involved. The future of Quebec’s visual effects and animation industry hangs in the balance as stakeholders await a resolution.