The thinktank TaxWatch UK has issued a report stating that Rockstar North, part of Rockstar Games and a subsidiary of Take-Two Interactive, has not paid any corporation tax in the UK for the last 10 years. This is despite record-breaking sales for Grand Theft Auto V and high sales for Red Dead Redemption 2, along with the income coming in from both GTA Online and Red Dead Online. The report also claims that the studio claimed £42 million in tax relief from the government’s tax relief fund for the game industry. Applicants to this fund have to meet a total of 16 points out of 31 to be eligible for tax relief, and you can see the full list of requirements below.
|Section A – Cultural content|
|A1||Set in the UK or an EEA state or (Up to 3 points will be awarded for set in an undetermined location)||Up to 4 Points|
|A2||Lead characters British or EEA citizens or residents (or characters from an undetermined location)||Up to 4 Points|
|A3||Video game based on British subject matter or relates to an EEA state or underlying material||4 points|
|A4||Original dialogue recorded mainly in English language or one of six UK indigenous languages||Up to 4 Points|
|Section B – Cultural contribution|
|B||Video game represents/reflects British creativity, British heritage or diversity||Up to 4 Points|
|Section C – Cultural hubs|
|C1||At least 50% of the conceptual development or storyboarding or programming or design takes place in the UK||2 points|
|C2||At least 50% of the music recording or audio production or voice recording takes place in the UK||1 point|
|Section D – Personnel|
|D1||1 of the 3 lead project leaders is an EEA citizen or resident||1 point|
|D2||1 of the 3 lead scriptwriters is an EEA citizen or resident||1 point|
|D3||1 of the 3 lead composers is an EEA citizen or resident||1 point|
|D4||1 of the 3 lead artists is an EEA citizen or resident||1 point|
|D5||1 of the 3 lead programmers is an EEA citizen or resident||1 point|
|D6||1 of the 3 lead designers is an EEA citizen or resident||1 point|
|D7||At least 1 of the 7 key HoDs is an EEA citizen or resident||1 point|
|D8||At least 50% of the development team are EEA citizens or residents||1 point|
Rockstar North would meet the requirements likely through all of section D, which gives 8 points, C1 gives a further two points, A4 which adds another 4 points, and there could be arguments for B as the game is created in Britain taking it past the 16 point threshold. Tax is an incredibly complicated area and no doubt Rockstar North is set up so much of the income actually goes back to Take-Two Interactive in the USA. That income going back to the US would mean the UK finances wouldn’t show a profit so no tax would be eligible to be paid.
Rockstar isn’t the only company to take advantage of loopholes in UK tax law with the likes of Amazon and Starbucks also cited as corporations that don’t pay as much tax as expected. Gareth Williams of LittleBigPR tweeted the following.
The tests aren't that stringent. There isn't a single developer/publisher I know that doesn't claim tax relief through the scheme.
— Gareth at GDC SF ㊗️ (@Shakacarnage) July 29, 2019
Until such loopholes are addressed this will continue, with it unlikely that Rockstar will be voluntarily paying tax to the UK government when it has found ways which mean it doesn’t have to.
Source: The Guardian