Grand Theft Auto developer Rockstar Games faces heavy criticism for not paying any corporation tax in the UK for 10 years. The company, which is headquartered in Edinburgh, Scotland, has also received tens of millions of dollars in tax relief from the British government.
Investigative think tank Tax Watch UK reveals that between 2009 and 2018, Rockstar Games hasn't paid any UK corporation tax. This is despite the fact that Rockstar made $5 billion in operating profit between 2013 and 2018 with Grand Theft Auto V, released in 2013, becoming the most profitable entertainment product of all time.
GTA V made $800 million in its first 24 hours on sale and it keeps making money through the sale of microtransactions for its Grand Theft Auto Online multiplayer mode. Sales of the game may have reached $6 billion, says Tax Watch UK. Rockstar has also made huge profits from the release of Red Dead Redemption 2, a game which shipped 17 million copies in just over a month and quickly outperformed its predecessor, Red Dead Redemption.
The think tank explains that not only has Rockstar Games not paid any corporation tax, but it has also received £42 million in tax relief, which is equivalent to $51 million. Rockstar North, which developed GTA 5, received these tax credits between 2013 and 2017 and the figure is around 19% of all tax credits given to the UK games industry.
Rockstar was allowed to apply for these tax credits because GTA 5 was labeled "culturally British" by the British Film Institute. However, while the developer is a famous British business, as explained in a controversial BBC documentary about Rockstar's founding, Tax Watch UK says that it is "bizarre" that GTA V was given this right.
Diversity is an important part of the BFI Cultural Test and the think tank suggests that a game where players can murder prostitutes, doesn't have a female protagonist, and doesn't have any British characters shouldn't qualify. The BFI may have felt that the game, and its take on the 2008 financial crisis, appropriately addresses the issues of "contemporary social and cultural issues of disability, ethnic diversity and social exclusion," but Tax Watch UK disagrees.
Tax Watch UK doesn't allege that Rockstar Games or its parent company, Take-Two, have acted illegally but it does call the issue "absurd" and urges HMRC, the UK tax office, to investigate. It's unclear when or if the UK will take another look at the way that the tax relief system works but any outcome could potentially have a huge effect on the UK games industry.
Source: Tax Watch UK