Rockstar Hasn’t Paid UK Corporate Tax in 10 Years Despite Record Profits
Rockstar North, the studio responsible for developing the record-breaking Grand Theft Auto V, hasn’t paid any corporate tax in the UK for 10 years, according to a new report from TaxWatch UK, an investigative thinktank. The report found that from 2013, Rockstar Games made profits of around $5 billion dollars. However, it hasn’t paid any corporate taxes since 2009, and even claimed £42 million in tax credits from a scheme meant to financially support the UK games industry.
Report Finds That Rockstar North Hasn’t Paid UK Corporate Tax in 10 Years
Rockstar North is the primary, UK-based studio of Rockstar Games, who are themselves a property of publisher Take-Two Interactive. Rockstar North is actually where Rockstar began, and was the lead studio in development on Grand Theft Auto V. However, TaxWatch UK’s report found that Rockstar exploited legal loopholes in the UK tax system. This has let them avoid paying any corporate tax from 2008 to 2018. (Despite the fact that GTA V made over £1 billion in its first three days alone, and Rockstar Games’ operating profits from 2013 to 2019 were around £4 billion.) In fact, much of the company’s profits have gone directly to senior staff. From 2009 to 2019, senior employees at Rockstar Games got bonuses of up to $3.4 billion. “Take-Two appears to believe that it is reasonable that close to 100% of the profit should flow to their US-based parent companies and senior management,” states the report; “while almost no profit flows back to the UK companies involved in either making or selling the game.”
Rockstar North Has Claimed £42 Million in Tax Relief
However, what makes matters worse is that Rockstar North has actually claimed around £42 million dollars in taxpayer-funded tax credits under a government scheme set up in 2014. Meant to provide financial support to the UK games industry, the scheme provides tax relief to the developers of games which, as the Guardian describes; “pass a cultural test administered by the British Film Institute that establishes a significant contribution to British culture”. This test includes qualifications such as including British settings and characters, and promoting cultural diversity. It’s unknown how well GTA V scored.
Since Grand Theft Auto V qualified under this test in 2015, Rockstar North has claimed a massive amount; around 19% of all the relief provided by the scheme to the entire industry. TaxWatch UK’s report draws specific attention to this, noting; “It is outrageous that the UK taxpayer is being asked to shell out tens of millions of pounds in subsidy 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. This is a drive-by assault on the British taxpayer and corporate welfare scrounging at its very worst.”
However, as the report notes, Rockstar North has not broken any laws. The company has made use of legal loopholes to avoid paying corporate tax. However, TaxWatch UK does recommend that the UK government look seriously at how tax relief for games studios is allocated. Certainly, there are much smaller development studios who have much greater need for such tax relief.