Rockstar is one of the biggest developers around right now, and the success of Grand Theft Auto V (which has amassed around $6 billion USD in total revenues since release in 2013) is in no small part down to UK-based Rockstar North leading development.
According to a report by Tax Watch UK though, Rockstar North has claimed £42 million in subsidies via the Video Games Tax Relief program, introduced in 2014 to provide support for "culturally British" games.
"Our analysis shows that the amount claimed by Rockstar North is the equivalent of 19% of the total relief paid to the entire video games industry in the UK since the programme came into effect. This raises serious questions as to whether the relief is being properly targeted, at a time when the industry is lobbying for the relief to be expanded and made more generous," Tax Watch writes.
"This report also raises questions as to whether an appropriate amount of profit has been allocated to the UK companies involved in the game's development. Seven active companies based in the UK, using the Take-Two and Rockstar names, declared a total profit before tax of £47.3m in the UK between 2013 and 2018. However, over the same period we estimated the operating profit of games published by Rockstar to be in the region of $5bn."
What's more is that Tax Watch adds that the relief - costing £35 million a year - was meant to be reviewed after three years of operation, but there's no evidence that this has taken place. In fact, it cost £108 million in 2017/18 alone.
"Although the statutory accounts of Rockstar North, the maker of Grand Theft Auto V, state that the company is hardly making any profit, the game is widely reported to be the most profitable media product in history," the report continues.
"Grand Theft Auto has been referred to by some as a "Great British Export". However, a brief look at the accounts of the UK based developer of the game, with its slender profits, would not lead one to that conclusion. Rather than a picture of success, the accounts of the developers of the game, Rockstar North, show that the company has earned so little that they have been eligible to claim tax credits from the government."
"The situation is absurd. The large amounts of subsidy that Rockstar North has been able to claim from the UK government demonstrates that the Video Games Tax Credit system is not working as intended. The government should hold an immediate review into its effectiveness."
On top of this, the same report indicates that no Rockstar or Take-Two companies in the UK have paid any corporation tax over the last decade either, and the full analysis of the situation - including Rockstar North's own division of profits with publisher Take-Two Interactive - can be found here.
Does this tax relief scheme need changing?
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