Grand Theft Auto maker has paid no UK corporation tax for 10 years – report | Corporate governance
Rockstar North, the Edinburgh-based developer of Grand Theft Auto, has paid no corporation tax for the past 10 years, despite making billions in revenue for its parent company Take-Two Interactive, while claiming more than 42 million pounds of tax relief.
A report by investigative think tank TaxWatch UK estimates Rockstar Games’ operating profit at $5bn (£4bn) between 2013 and 2019, the period in which the company released Grand Theft Auto V (GTA V) and Red Dead Redemption 2. Rockstar North is part of Rockstar Games.
GTA V has sold over 100 million copies, making it one of the highest-grossing entertainment products of all time. It racked up £1 billion in its first three days on sale in 2013. According to revenue reports from Take-Two, GTA V’s online component, GTA Online, brought in hundreds of millions in revenue. .
But the company paid no corporation tax between 2009 and 2018. It received £42million in tax credits under the government’s Video Games Tax Relief scheme, which was put in place. place in 2014 to bolster the UK’s £5 billion games industry, much of which is made up of small and medium-sized developers. The sum is equivalent to 19% of the total relief given to the entire UK gaming industry since 2014, reports TaxWatch.
To benefit from the tax relief scheme, games under development must pass a cultural test administered by the British Film Institute which establishes a significant contribution to British culture. To be eligible, games must score at least 16 out of a possible 31 points awarded for British settings, characters and development and promoting cultural diversity. GTA V, a satirical game set in a fictional California, qualified in 2015.
Rockstar Games, which has studios based in India, Canada and the United States as well as the United Kingdom, is owned by Take-Two Interactive, a multinational video game publishing company that also owns 2K Games, publisher of the NBA video game, Civilization and Borderlands. series. Take-Two has a market value of $13.1 billion. Rockstar Games senior executives shared a bonus pool of up to $3.4 billion in 2009-19.
The TaxWatch report calls the situation “absurd” and raises questions about how Rockstar Games and Take-Two profit split and whether the video game tax break was properly applied.
“Take-Two appears to believe it is reasonable that nearly 100% of profits should accrue to their US-based parent companies and senior management, while almost none of the profits should accrue to UK companies involved in manufacturing or sale of the game,” the report reads.
George Turner, director of TaxWatch, said: “It is outrageous that the British taxpayer is being asked to hand out tens of millions of pounds in Grand Theft Auto Developer Grant, when at a time when the game’s developers put their Grand Theft Auto V tax credit claim had already generated billions of dollars in sales and profits. This is a driving assault on the British taxpayer and corporate welfare at its worst.
TaxWatch concludes that the UK government should urgently review allocating tax relief to the games industry, although it also says the allocation of Rockstar and Take-Two profits is entirely legal.
‘There is no evidence that HMRC disputed this setup or that Take-Two or any of the people named in this report acted unlawfully,’ he said.
Rockstar North did not respond to requests for comment.