Rockstar Games countered the claim that it took £37.6 million in tax relief intended for indie studios, as described in a report from investigative think tank, Tax Watch UK (via VG247).
Tax Watch UK doesn’t like Rockstar Games. In its report on the publisher’s tax returns, it expressed that Rockstar Games is soaking up a significant share of the UK Video Games Tax Relief fund. This fund is derived from a point-based test that determines the cultural significance of the game to the UK. If a company scores over half of a possible 31 points dependent upon a range of factors, they get the tax break. Tax Watch UK claimed that Rockstar North—the Grand Theft Auto developer based in Edinburgh— snapped up almost 40 per cent of the total tax relief claims in the industry, amounting to £37.6 million.
“The Video Games Tax Relief was designed to help developers of games with a cultural content that would struggle to sell in the international market. The fact that such a large amount of that relief is going to the developers of Grand Theft Auto clearly shows that the relief is not working as intended,” said director of Tax Watch UK George Turner when Rockstar Games was also accused of paying no corporation tax between 2009 and 2018 while reporting “slender profits” in the UK. Moreover, Tax Watch UK reckons that the approximate £38 million in tax relief received by the publisher “relates to the production of the next edition of GTA, rumoured to be scheduled for release soon.” This is because, “the company has not registered any other games as being ‘Culturally British’, the pre-requisite required to qualify for the relief, since GTA V.”
Now, Rockstar Games has responded to Tax Watch UK’s report. “The UK’s program to support the growth of a broad range of creative industries through tax relief is a proven success. The program has directly resulted in Rockstar Games significantly increasing its investment in the UK, creating well over 1,000 highly skilled and long term jobs across London, Lincoln, Yorkshire and Scotland,” the representative said. “This investment and the success of British video games supported by the program not only significantly contributes to the economy, and to UK tax receipts, but also helps solidify the UK’s position at the forefront of video game development well into the future.”
UKIE, the non-profit trade association for the video game industry in the UK, backed Rockstar Games’ activities. In its statement, it said that the Video Games Tax Relief initiative possesses a “great return on investment for the taxpayer” and underpins the existence of almost a third of the UK’s game developers’ positions. “Video Game Tax Relief (VGTR) is a forward thinking policy that shows the UK understands the significance of games as a leading creative industry. We know that VGTR delivers a great return on investment for the taxpayer. For every £1 invested into the games industry via VGTR, it pays back £4 in gross value add into the economy,” read the statement from UKIE.
“But even more importantly, VGTR directly supports 4,320 high productivity full time jobs in game development roles—nearly a third of our entire development workforce—across the country. This helps businesses based everywhere from Dundee to Brighton to play on the global stage, while allowing local communities to benefit from great jobs fit for a digital age. The UK enjoys a global reputation for creative excellence in game development. Now is the time to continue to support an industry that drives inward investment, exports globally and provides a world beating showcase of the skills the UK has to offer,” it concluded.