A trade association which represents computer games firms yesterday urged MSPs to back a call for tax breaks to support the industry.
Tiga chief executive Richard Wilson said companies were competing on an “uneven playing field” with foreign competitors which all receive some form of tax break.
He spoke out after a new report said action was needed to ensure the industry, largely based in Dundee, keeps its competitive edge.
Dundee is home to 10% of the UK’s computer games companies employing 3,500 people across the city.
Mr Wilson said: “If we want the Scottish games industry in particular, and the UK games industry in general, to stay ahead of the pack, then we must introduce a tax break for games production similar to the EU-approved French tax credit.
“Industry research indicates that if a 20% production tax credit was introduced, investment would increase by £220million over five years, generating a further 1,600 graduate jobs over the same period.”
Mr Wilson said the tax break would cost HM Treasury £150million over five years.
Dundee West MSP Joe Fitzpatrick led a debate on the issue in the Scottish Parliament yesterday.
He said competitors in Australia, Canada, China, France and other countries including the US, all received national or regional tax breaks for computer games.
“Abolishing VAT for research and development would give Scottish firms the same benefits as those in France and keep us at the forefront of the industry,” he added.
“I want to see Chancellor Alistair Darling take action in the upcoming budget.”
A report from the National Endowment for Science, Technology and the Arts (Nesta) urged both the Westminster and Scottish Governments to do more to encourage innovate creative businesses.
It identified several ways in which the games sector could be helped, including simplifying the existing tax credit for research and development, a kitemark for video game courses to improve the employability of their graduates and education fund to finance the placement of lecturers in video games studios.
Labour accused Mr Fitzpatrick of “misleading” comments on tax breaks.
Mid Scotland and Fife MSP John Park said computer games firms were eligible for tax credits as they were in other countries.
“If Joe Fitzpatrick knew what he was talking about he would have noted research and development tax credits increased in last year’s budget,” he added.
“The SNP seem to be deliberately ignoring the facts that schemes are already available.”