Quebec VFX, animation studios say province's tax credit cuts will hurt industry

Visual effects and animation studios are sounding the alarm over impending tax credit cuts by the Quebec government which, they say, will put the province's status as an industry leader in jeopardy.

A news release, supported by more than 20 studios, was released Wednesday. It says the imposition of a 65 per cent cap on tax credits threatens thousands of jobs, the industry's global competitiveness and the province's economic growth.

"We actually have three big contracts that we lost," said Vronique Tassart, who works for Montreal-based Cinesite.

Studios argue that the tax break has been a key factor in attracting Hollywood productions.

"Some of the clients actually told us that when they did the calculations of the tax credit for a project, Quebec was the first," said Tassart. "Now it's not even on the map."

The VFX industry in Quebec had been experiencing a decade of growth. However, the strikes in Hollywood in 2023 led to mass layoffs.

Nathalie Girard lost her job at Rodeo FX earlier this year following the announcement of the new tax measures.

She said she's concerned that these changes would severely impact Quebec's competitiveness. Consequently, she is now seeking employment opportunities abroad.

"The net effect is that it's nearly a 30 per cent cut in the visual effects tax incentives," she said.

The provincial government argues that the changes are necessary to save money. While the industry generated $8 billion for the economy last year, Quebec invested $226 million into the tax credit in 2018, a figure that is projected to rise to $440 million this year.

"Quebec should not have the most competitive tax credit in the world," said Finance Minister Eric Girard.

"The cost of these tax credits was increasing significantly over time. We want to contain the cost while remaining competitive with Ontario. The decision is made."

The new tax measures are set to take effect on May 31. Studio heads are urging the provincial government to postpone until next January to allow time for discussions and to explore alternative solutions.

"We are extremely worried about the future of our studio and the industry at large in Montreal," said Chlo Grysole, with Framestore Canada, in the news release.

"If the situation is not rectified quickly, Quebec's attractiveness to international producers and studios will decrease exponentially."