A group called TaxWatch has a new report that details how Rockstar North, developers of Grand Theft Auto V have not had to pay a corporate tax in the UK. The report’s primary focus is on Rockstar North and Grand Theft Auto V which is “the most commercially successful product in the history of the entertainment industry, with total revenues estimated to be 6 billion since the game’s release in 2013.”
Tax Watch’s analysis shows that despite the success of the game, “Rockstar North and Take-Two companies based in the UK have not paid any corporation tax over the last ten years.” Furthermore, Rockstar North has claimed $42 million in subsidies from the taxpayer in the form of credits through the Video Games Tax Relief between 2015 and 2017 which is 19% of the total “tax credits paid by government to the industry.”
The Video Game Tax Relief reduces the taxable profit of a video game developer. Developers can deduct an extra 25% of qualifying expenditure from their taxable profit. Developers can claim a cash credit if the game is loss-making. The Video Games Tax Credit is only available to games “that were culturally British, under a test administered by the British Film Institute”. Grand Theft Auto V was certified culturally British by the British Film Institute which allowed them to access to substantial amounts of tax credits.
In the conclusion, the report states: “The situation is absurd. The large amounts of subsidy that Rockstar North has been able to claim from the UK government demonstrates that the Video Games Tax Credit system is not working as intended. The government should hold an immediate review into its effectiveness. Furthermore there are serious questions over how the company has been treated for tax purposes in the UK”.
Speaking to gamesindustry.biz, TaxWatch director George Turner said “It is outrageous that the UK taxpayer is being asked to shell out tens of millions of pounds in subsidies to the developers of Grand Theft Auto, when at the time that the game’s developers put in their tax credit application Grand Theft Auto V had already generated several billion dollars in sales and profits.” Turner would continue with, “This is a drive-by assault on the British taxpayer and corporate welfare scrounging at its very worst. The Video Games Tax Relief was designed to help developers of games with a cultural content that would struggle to sell in the international market. The fact that such a large amount of that relief is going to the developers of Grand Theft Auto clearly shows that the relief is not working as intended.”