Rockstar North has received 19 percent of all tax credits paid to the games industry by the UK government and paid nothing in corporation tax for nearly a decade, according to a report from TaxWatch. The UK tax think tank estimates that the Grand Theft Auto developer has claimed around £42 million /$51 million over the last few years through the Video Games Tax Relief scheme.
While GTA 5 is one of the most profitable entertainment products of all time, with TaxWatch estimating total sales of around £5 billion/$6 billion, it's able to apply for Video Games Tax Credits because it's been given the "culturally British" stamp by the British Film Institute. While the vast majority of Rockstar's games are set in the US, Rockstar North is based in Edinburgh, Scotland.
"Our analysis shows that the amount claimed by Rockstar North is the equivalent of 19% of the total relief paid to the entire video games industry in the UK since the programme came into effect," reads the report. "This raises serious questions as to whether the relief is being properly targeted, at a time when the industry is lobbying for the relief to be expanded and made more generous."
Rockstar North is eligible for tax credits because it, in combination with the six other UK studios under the Take-Two and Rockstar umbrella, declared just £47.3 million/$57 million in profit between 2013 and 2018, which is comparatively tiny compared to the operating profit of Rockstar's games, estimated by TaxWatch to be $4 billion/$5 billion. Most of the profit is reported by the US side, despite the contributions the UK studios make to the games.
Rockstar North started receiving Video Game Tax Credits around three years ago and it's received almost six times its operating profit since then, according to TaxWatch.
"How is it possible that a game made in the UK," asks the report, "generating billions of dollars in profit for its parent companies and senior management, makes a loss for tax purposes in the UK and is able to claim tax back from the government?"
The think tank is calling in HMRC to investigate Rockstar Games and Take-Two's UK tax situation, with its director calling it "outrageous" that tax payers are subsidising Rockstar when GTA 5 was already generating billions in profits for the publisher.
I've reached out to Rockstar and will update the article if I get a response.
