It is hoped a new 32% tax credit for video game companies will promote creativity in the industry and attract gaming studios to Ireland.

The relief will be provided through a refundable corporate tax credit available to companies for the qualifying cost of designing, producing and testing a video game.

The rate will be at 32% of eligible expenditure up to a maximum of €25 million per project.

There will also be a minimum spend requirement of €100,000 per project.

The aim of the credit is to retain the main gaming brands in Ireland through more development activities, to support the scaling-up of indigenous developers and to lure international studios who have not already invested in this country.

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The Department of Finance said that the global digital gaming market is estimated to exceed the global film and music industries combined.

A 2017 report commissioned by the Government estimated that in 2016, the video game industry generated €143million in gross value added to the Irish economy.

Irish video games, however, account for just €1.2 million of this total.

Finance Minister Paschal Donohoe said the credit will ensure Ireland is competitive in an industry estimated to be worth up to €260 billion globally.

He said: "Ireland is already a world leader in other areas of the audio-visual sector including film, television and animation production. I believe that this credit will be instrumental in replicating such successes in the digital gaming sector."

Media Minister Catherine Martin said the industry is increasingly employing more people.

Craig Stephens of Imirt, the Irish video games industry association, said: "This globally significant 32% credit will support our existing games development talent, plus attract major investment from overseas. Ireland is ideally positioned to secure more of the rapidly expanding €300bn worldwide industry."

Mr Donohoe and Ms Martin attended a launch event hosted by the gaming company Black Shamrock in the Guinness Enterprise Centre in Dublin and formally signed the regulations to give full effect to the legislation.

This follows approval of the credit by the European Commission in recent weeks.