Rockstar hasn't paid UK corporation tax in ten years, claims investigative think tank Grand Theft Auto V developer also received over £42 million in Video Game Tax Relief
Rockstar Games reportedly hasn't paid any UK corporation tax since 2009, according to a report from investigative think tank, TaxWatch.
Released over the weekend, the report claims the game giant has also pocketed £42 million in Video Game Tax Relief between 2015 and 2017; the figure accounts for 19% of all tax credits granted to the British games industry since the relief was introduced in 2014.
Video Game Tax Relief is available for games that pass a "cultural test" which considers content, cultural contribution, development hubs, and personnel.
"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," said TaxWatch director George Turner.
Full story at the link.
Considering the obscene costs of their games, and the horrendous price gouging in their online model, it's frankly embarrassing to think of the amount the UK taxpayer has subsidised this company.
Would love to know if the personnel criteria for the "cultural test" considers the horrific crunch culture at Rockstar as well.
The also report found that the seven UK-based Take-Two and Rockstar companies declared a total pre-tax profit of just £47.3 million between 2013 and 2018.
They just can't get a break; maybe GTA V isn't selling well in the UK? . I wonder if there is some sort of Patreon funding that we could do to help them out?
Unless governments across the world work together (which they won't), this puts any government attempting to do 'the right thing' in a bind because the last thing you want is jobs and companies leaving altogether. I mean look at all the games we don't make any more in the UK.
KK wrote:Unless governments across the world work together (which they won't), this puts any government attempting to do 'the right thing' in a bind because the last thing you want is jobs and companies leaving altogether. I mean look at all the games we don't make any more in the UK.
KK wrote:Unless governments across the world work together (which they won't), this puts any government attempting to do 'the right thing' in a bind because the last thing you want is jobs and companies leaving altogether. I mean look at all the games we don't make any more in the UK.
I very much doubt they aren't pocketing the tax they've avoided and have passed it on to their staff/created extra jobs out of it.
EDIT - Why can't I get this sentence right, what's wrong with my brain?
IAmTheSaladMan wrote:Might be a dumb question but are they even liable for corporation tax?
Yes, they make billions in profit. Without the tax relief, they would be liable.
This does look more like an issue with the tax relief scheme rather than Rockstar doing anything wrong-there's a relief scheme available, they applied, and met enough of the criteria to qualify.
IAmTheSaladMan wrote:Might be a dumb question but are they even liable for corporation tax?
Yes, they make billions in profit. Without the tax relief, they would be liable.
This does look more like an issue with the tax relief scheme rather than Rockstar doing anything wrong-there's a relief scheme available, they applied, and met enough of the criteria to qualify.
Allow me to elaborate. I wasn't sure they met the criteria for it. I wasn't sure if they were a limited company or not and they definitely aren't a sports club. Turns our they are a foreign company with a UK branch so they are liable on that front. I always though Rockstar were a British company.
As a counter argument, these reliefs aren't worth billions - the article says £42m.
They are generally designed to encourage companies and people to invest in, e.g. creative industries, in order to develop or retain skills and talent in those countries. Since, we dont make much any more and would be better off with a high skills tech savvy economy. So, there are plenty of talented people employed in the UK precisely because of those incentives to develop here. And, apart from developing a skill base here, those employees will also be paying UK taxes on their earnings.
Often, games etc are only profitable or at break even precisely because these reliefs exist, and have been factored in to their budget. To play devil's advocate, let's say you take those reliefs away, and it becomes more cost effective to develop the game in Poland, for example. The UK loses jobs, skills, and employment taxes, as well as paying people's benefits and to retrain them. I'm not really sure it's such a scandal, or such a bad idea, or that it is in some way evil.
I don't know about the corporation tax - the game might be made here, but I guess it's owned by the main company in the US (or wherever it is, I don't know), and so that's where they'll recognise the profits and pay the equivalent of corporation tax.
That's pretty standard for most multinationals, I'd have thought. Likewise, there will be UK companies trading successfully in the US, bringing their profits back here and paying UK taxes on them.
But the company has paid no corporation tax between 2009 and 2018. It has also received £42m in tax credits from the government’s video games tax relief scheme, which was set up in 2014 to bolster the UK’s £5bn games industry, much of which is made up of small and medium-sized developers. The sum is equivalent to 19% of the total relief paid to the entire UK games industry since 2014, TaxWatch reports.
Glad I bought RDR2 second hand now. Having said that, companies like Rockstar are just too rich not to exploit whatever rules are in place.. and tax breaks like this are a standard in the film industry - it's why so much is shot here rather than LA. Still scummy though.
Abacus wrote:Often, games etc are only profitable or at break even precisely because these reliefs exist, and have been factored in to their budget. To play devil's advocate, let's say you take those reliefs away, and it becomes more cost effective to develop the game in Poland, for example. The UK loses jobs, skills, and employment taxes, as well as paying people's benefits and to retrain them. I'm not really sure it's such a scandal, or such a bad idea, or that it is in some way evil.
Is GTA V not the most profitable piece of entertainment ever or something. Regardless claiming tax relief is not helpful strawberry floating Rockstar to scrape a living.
Abacus wrote:Often, games etc are only profitable or at break even precisely because these reliefs exist, and have been factored in to their budget. To play devil's advocate, let's say you take those reliefs away, and it becomes more cost effective to develop the game in Poland, for example. The UK loses jobs, skills, and employment taxes, as well as paying people's benefits and to retrain them. I'm not really sure it's such a scandal, or such a bad idea, or that it is in some way evil.
Is GTA V not the most profitable piece of entertainment ever or something. Regardless claiming tax relief is not helpful strawberry floating Rockstar to scrape a living.
Maybe, but I just don't agree that it is wrong. My understanding is that these kind of tax reliefs are offered by the government to encourage companies to make games in the UK rather than anywhere else.
Any company that qualifies can use this, and as I said above, it's presumably because the benefits to the UK outweigh the costs, otherwise they wouldn't be doing it. Plenty of other places would love to have high profile, successful games studio like this I'm sure, as a boost to their own games industries.
And regardless of where they pay corporation tax (which seems like a red herring, as it's nothing to do with this incentive), UK sales will also include sales tax, i.e. VAT. So, presenting this as some sort of tax dodge as some of the headlines seem to imply doesn't seem right to me.
GTA V had a total development cost (including marketing) of around $265 million. The game grossed $6 billion. No matter how you slice it, that's got to be billions of dollars of pure profit. It is by many metrics the most successful piece of entertainment media of all time.
Rockstar North should pay their strawberry floating taxes. If they flee the UK because they are asked to pay tax, then maybe the next £40 million in government videogames industry funding can go to start-ups who need it, rather than the global megacorporation who brought in the GDP of a small country from one videogame.
. I wonder if there is some sort of Patreon funding that we could do to help them out?
