Seeking to spur economic growth, all levels of government look to tax incentives. In a nutshell, a tax incentive will reduce the amount of money that a company must pay in taxes, either at the federal, provincial or municipal level. But tax incentives face their fair share of criticism: Do they work? Are they simply rewarding a company for doing something it would do anyway? Do they take money from the government (and as a result, the public) and give it to already profitable businesses?
Thankfully for all involved, the incentives from the Government of Manitoba are not created to just give money away as a reward to a business, but rather created strategically to foster sustainable and inclusive economic growth in certain jurisdictions.
For example, two industries that are on fire here are film and video games, partially thanks to tax incentives that were purposely created to incentivize companies in these areas.
The Manitoba Film and Video Production tax credit is the most competitive of its kind in Canada and played a role in bringing over 20 film productions to Winnipeg in 2021.
“The film tax credit is a key driver of this economic activity in a cost-sensitive industry that is starved for content, and our city and province are benefiting as a result,” says Ryan Kuffner, vice president of sales and business development for Economic Development Winnipeg Inc. (EDW). The organization’s YES! Winnipeg team was created in 2010 to be a concierge for businesses and make it as easy and seamless as possible for businesses to invest and grow in the capital.
The Manitoba Interactive Digital Media tax credit, which is Canada’s second-most competitive in the video game industry, was a key factor in attracting France’s Ubisoft to open a studio in Winnipeg. This resulted in the immediate creation of 100 new, highly paid jobs, and recently, Ubisoft announced a sizable expansion to 300 staff.
These are prime examples of the government thoughtfully creating incentives that are not just about giving away money, but instead, fill a niche and help to shine a light on our province in a unique and favourable way.
And at the end of the day, incentives are also simply a must for the province to stay competitive and entice businesses to come, stay and grow.
“Private capital from businesses is the biggest driver of economic development, and capital naturally flows to where it makes the most business sense,” says Kuffner.
But it really comes down to creating the right environment for business to succeed, he says.
According to Chuck Davidson of the Manitoba Chamber of Commerce, “It’s more about ensuring we have a competitive tax climate in Manitoba than about incentives. Manitoba is competitive with other jurisdictions in regard to corporate taxes and is a leader when it comes to small business tax.”
But there is always room for improvement. The Chamber is advocating for a broader review of the province’s entire tax system to ensure it is fair, transparent and competitive, and Premier Heather Stefanson is in support.
“This would provide greater certainty and help identify where tax incentives may be needed to attract and strengthen key industries and sectors,” says Davidson.
Current Manitoba Tax Incentives
Here is a sample of tax incentives currently available to businesses who call Manitoba home or are considering the move.
Manitoba Works Capital Incentive encourages significant new business investment or existing business expansion by creating a competitive tax environment to help diversify Manitoba’s economy and stimulate job creation.
Manitoba Manufacturing Investment Tax Credit provides qualified companies with an 8 per cent tax credit from the purchase of eligible equipment, applied against Manitoba corporate income tax. Unused credits can be carried for ten years.
Manitoba Scientific Research And Experimental Development (SR&ED) is a 15 per cent top-up credit on the federal SR&ED program; up to 50 per cent in combined tax credits for qualified research and development.
Paid Work Experience Tax Credit (PWETC) provides qualified employers with a percentage of the wages and salaries paid to certain types of trainee employees and recent graduates working in Manitoba.
Manitoba Interactive Digital Media Tax Credit (MIDMTC) provides up to a 40 per cent credit to businesses on qualified labour expenditures and some marketing and distribution expenses incurred in the development of eligible interactive digital media products for market.
Manitoba Film And Video Production Tax Credit allows claims for up to 65 per cent with the Cost-of-Salaries Tax Credit (including bonuses) OR up to 38 per cent on all eligible Manitoba expenditures with the Cost-of-Production Tax Credit (including bonus).
