A report issued by the investigative thinktank TaxWatch UK has revealed that developer Rockstar Games has paid no corporate tax over the past ten years. In that time, it's estimated that the operating profit of the company has been $5 billion between 2013 and 2019, mainly from its revenue streams tied to Grand Theft Auto V and Red Dead Redemption 2.
The names of those two titles should be familiar, as GTA V has sold over one hundred million copies and is still wildly popular today with its ongoing evolution of the online portion of the game. Take-Two, the parent company of Rockstar, reports that GTA V online has generated hundreds of millions in revenue on its own.
Meanwhile, the issue that is bound to make some heads spin is that during that time, the company received £42 million in the form of tax credits. This stems from what's known as the video games tax relief scheme - a program established in 2014 to assist the games industry within the UK. The spirit of the tax credit was aimed at small and medium-sized developers looking to grow, yet Rockstar seems to make up for 19% of the total number of credits paid to the entire games industry since the inception of the program.
The thinktank is calling on the company to answer why they need such lofty tax treatment, given their profits over the past decade. UK citizens are footing the bill and losing out on the potential for tax revenue.
With that in mind, the answer is quite simple when examining tax incentives around the world. If suddenly the UK decided to remove Rockstar Games from eligibility for the tax credits that they've had, what incentive do they have to stay in the country? Currently, Rockstar has branches in India, the United States, and Canada, and there is little doubt that if the company probed other countries, there would be substantial incentives to entice them to move into their economies.
Whether or not on everyone agrees with providing tax credits to corporations that clearly do not need them, the truth is that competition is fierce for the development resources of these types of companies. Worse still, with a likely no-deal Brexit becoming more and more of a reality, what reason would Rockstar even have to remain within the UK given the instability of the economy?
These are all complex questions that cannot be answered here, but there's definitely more to be done than simply asking Rockstar why they are using these tax credits. The answer is obvious, in that using laws to minimize taxes paid is literally the calling card of a smart business. If anyone should be questioned here, it should be those who wrote the programs in the first place and allowed for corporations like Rockstar to use them.