The following words and phrases when used in this subarticle shall have the meanings given to them in this section unless the context clearly indicates otherwise:
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).(2) A Pennsylvania S corporation as defined in section 301(n.1).(3) An unincorporated entity subject to section 307.21."Pennsylvania production expense." Production expense incurred in this Commonwealth. The term includes:
(1) A payment made by a taxpayer to a person upon which withholding will be made on the payment by the taxpayer as required under Part VII of Article III.(2) Payment to a personal service corporation representing individual talent if the tax imposed by Article IV will be paid or accrued on the net income of the corporation for the taxable year.(3) Payment to a pass-through entity representing individual talent if withholding will be made by the pass-through entity on the payment as required under Part VII or VII-A of Article III.(4) The cost of transportation incurred while transporting to or from a train station, bus depot or airport located in this Commonwealth.(5) The cost of insurance coverage purchased through an insurance agent based in this Commonwealth.(6) The purchase of music or story rights if any of the following subparagraphs apply: (i) The purchase is from a resident of this Commonwealth.(ii) The purchase is from an entity subject to taxation in this Commonwealth, and the transaction is subject to taxation under Article III or IV.(7) The cost of rental of facilities and equipment rented from or through a resident of this Commonwealth or an entity subject to taxation in this Commonwealth.(8) The development and manufacture of video game equipment."Production expense." As follows:
(1) The term includes all of the following: (i) Compensation paid to an individual employed in the production of a video game.(ii) Payment to a personal service corporation representing individual talent.(iii) Payment to a pass-through entity representing individual talent.(iv) The costs of construction, operations, editing, photography, sound synchronization, lighting, wardrobe and accessories.(v) The cost of leasing vehicles.(vi) The cost of transportation to or from a train station, bus depot or airport.(vii) The cost of insurance coverage.(viii) The costs of food and lodging.(ix) The purchase of music or story rights.(x) The cost of rental of facilities and equipment.(xi) Development and production costs relating to video games.(2) The term does not include any of the following: (i) Deferred, leveraged or profit participation paid or to be paid to individuals employed in the production of a video game or paid to entities representing an individual for services provided in the production of a video game.(ii) Expense incurred in marketing or advertising a video game.(iii) Cost related to the sale or assignment of a video game production tax credit under section 1755-D(e)."Qualified tax liability." The liability for taxes imposed under Article III, IV, VI, VII, VIII, IX or XV. The term does not include a tax withheld by an employer from an employee under Article III.
"Qualified video game production expense." All Pennsylvania production expenses if Pennsylvania production expenses comprise at least 60% of the video game's total production expenses. The term does not include more than $1,000,000 in the aggregate of compensation paid to individuals or payment made to entities representing an individual for services provided in the production of the video game.
"Start date." The first day of principal production of a video game in this Commonwealth.
"Tax credit." The video game production tax credit provided under this subarticle.
"Taxpayer." A video game production company subject to tax under Article III, IV or VI. The term does not include contractors or subcontractors of a video game production company.
"Video game." An electronic game that involves interaction with a user interface to generate visual feedback on a video device. The term does not include a game that contains obscene material or performances as defined in 18 Pa.C.S. § 5903(b) (relating to obscene and other sexual materials and performances) or a game designed primarily for private, political, industrial, corporate or institutional purposes.
"Video game equipment." Equipment that is required for the development or functioning of a video game. The term includes:
(1) Integrated video and audio equipment, networking routers, switches, network cabling and any other computer-related hardware necessary to create or operate a video game.(2) Software, notwithstanding the method of delivery, transfer or access.(4) Image files, music files, audio files, video files, scripts and plays.(8) A component part of an item listed under paragraph (2), (3), (4), (5), (6) or (7), necessary and integral to create, develop or produce a video game.Added by P.L. TBD 2016 No. 84, § 30, eff. 7/13/2016.