Opinion | Brazil’s New Gaming Law Can Lead To More Jobs, Ease Taxes. Here’s What India Can Learn

Brazil’s proactive and comprehensive approach towards nurturing its electronic gaming industry through a recently passed law is truly commendable. This progressive legislation not only delineates a clear legal framework for the myriad facets of gaming activities (including manufacturing, importation, development, and commercial use) but also actively fosters an environment conducive to innovation and growth within the sector. India Stuck In Perpetual Loading Screen Indian regulators and policymakers must take a cue and look for betterment and progress in the sector. The Indian market is quite similar to that of Brazil and at a nascent stage. Any progress made here would go a long way for job creation. As Brazil scores a critical hit with its avant-garde gaming law, India seems to be stuck in a perpetual loading screen waiting for an update which never comes. It’s like comparing a fully immersive VR experience set in Rio de Janeiro to a laggy arcade game in Mumbai, which could be charming in a vintage sense, but hardly a match for present-day demands. ALSO READ | Call For Reform: Vagueness, Subjectivity, Ambiguity Should Go From Advertising And Programming Code Brazil’s Warp Tunnel To Growth The legislative masterpiece is like a well-executed cheat code for the gaming industry in Brazil. Speaking in Super Mario terms, it’s like a warp tunnel to growth, bypassing the goombas of bureaucracy and leaping straight to the flagpole of economic prosperity. It is like a Swiss army knife for the gaming sector, equipped with all the tools needed for economic success. According to the law, electronic games are defined as “computer programs featuring graphical and audiovisual elements designed for recreational purposes, where users can control the action by interacting with the interface. This includes consoles, mobile applications, and web pages, among others”. The law astutely recognises electronic games as cultural and recreational software, encompassing a wide array of platforms such as consoles, mobile applications, and websites, while prudently excluding games of chance to mitigate the risks associated with gambling. The relic-like slot machines and games of chance are being left out of the digital party like vampires from a beach day because when you’re building a culture, you don’t invite the Count of Monte ‘Casino’. Incentive structures under the law are particularly noteworthy, as they extend beyond mere regulatory measures to embrace the integration of game creators within the ambit of existing cultural and entrepreneurial laws. This holistic inclusion sets a precedent for recognising gaming as a legitimate and valuable component of the cultural fabric and economic infrastructure. These incentives are like power-ups for everyone in the industry. The legislation is understood to give a ‘golden mushroom boost’ through four different laws. There is support for SDK development, tax cuts on gears and gadgets, and a noble quest to wield games for more than just entertainment (think therapeutic adventures and more). The emphasis on workforce development and education, as outlined in the law, is a strategic investment in the future of the gaming industry in Brazil, ensuring a steady pipeline of skilled professionals. Brazil is crafting a legion of gaming gurus through educational courses, spurring research and development like a scholarly guild of digital wizards. ALSO READ | Unshackling Creativity: Navigating The Hall Of Mirrors In BSR Bill 2023 Tax Benefits The development of electronic games is recognised as technological research and development under existing tax laws. This enables game developers to benefit from tax incentives, including deductions for research and development expenses, and a reduction in the tax levied on equipment used for research and development activities. Up to 6% of all income tax for all individuals and 4% for legal entities can be exempt if invested in game production. Tax incentives for audio-visual production – a reduction of 70% of the tax due on remittances abroad related to the exploration or licensing of games, as long as they invest in independent Brazilian game projects. The law is also understood to have provisions to improve intellectual property protection for games. The generous tax incentives aligned with research and innovation further underscore the government’s commitment to supporting technological advancement in this sphere. The tax incentives are more like loot boxes filled with fiscal joy, where developers find themselves in a bonus round of deductions and rebates, turning tax season into a game of strategic financial manoeuvring where everyone wants to play. ALSO READ | Square Peg In A Round Hole: The OTT Broadcast Redefinition Conundrum India’s Overpowered Final Boss India, with its burgeoning gaming market that echoes the vibrancy and potential of Brazil’s, stands to gain significantly from adopting a similar legislative posture. The current IT Amendment Rules, 2023, alongside the hefty imposition of a 28% GST on online gaming, seems to falter in comparison to Brazil’s more nurturing and holistic approach. The IT Amendment Rules, 2023, are like a patch that was meant to fix bugs but ended up introducing new ones. Additionally, the 28% GST on online gaming is like a final boss that’s way too overpowered, draining the life force of gamers and developers alike. It’s like a Bollywood drama — full of potential but currently in a scene where the hero is tied to the tracks while the train of progress is miles away, chugging along on bureaucratic goals. It’s high time the scriptwriters — ahem, policymakers — pen a blockbuster twist. ALSO READ | Tech Tango In Canada: Google’s C$100 Mn Settlement With News Publishers Is Like A Thrift Shop Deal A Leaf Out Of Brazil’s Book A paradigm shift in India’s policy landscape to emulate Brazil’s example could catalyse the Indian gaming industry’s growth, safeguard intellectual property, and streamline the taxation structure to be more supportive of innovation. Such reforms would not only unlock significant economic value, but also enhance India’s position as a global hub for the gaming industry, bolstering job creation, regional development, and international investment. In light of these developments, it is imperative for Indian policymakers to reconsider the current regulatory framework and explore avenues for creating a more vibrant, sustainable, and thriving electronic gaming ecosystem. The Brazilian model serves as a benchmark that, if adapted to the Indian context, could revitalise the sector and harness its full potential as a major contributor to the nation’s cultural and economic prosperity. It is time for India to hit the ‘Continue’ button, insert a new coin and join the Brazilian carnival of gaming fiesta. (The author is an independent counsel and columnist) Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd.